Unknown Speaker 0:01
The purpose of wealth talk is to educate, inform, and hopefully entertain you on the subject of building your wealth. Wealth builders recommends you should always take independent financial tax or legal advice before making any decisions around your finances.
Christian Rodwell 0:19
Welcome to Episode 167 of wealth talk. My name is Christian Rodwell, the membership director of wealth builders and I'm joined by our founder Mr. Kevin Whalen. Hi, Kevin.
Unknown Speaker 0:28
Hello, Chris, you may have noticed I'm kind of wearing extra layers today. My wife refuses to put the heating on October, right. Can you believe it? There's a cost of living crisis. Don't you know what's going on?
Christian Rodwell 0:42
Oh, there? Yes. Well, of course, we always record on video. I know many people just plugging us in listening to the audio version. But yes, we have the video. So do hit the wealth builders, socials. Make sure you're following us on Instagram, and Facebook and all those usual places. And you can see a little bit of behind the scenes of us recording this podcast. So we're back today. And we have a guest, who is a well known guest to us. And that's Carol Robinson, who's one of our wealth coaches in the wealth builders Academy. And Carol in her own right is a successful businesswoman, investor and developer.
Unknown Speaker 1:17
Well, and always getting top marks from our, from our members when she delivers her coaching style, which is, you know, unique and different, but very much appreciated by by our membership, and I think she's getting like nine and a half and 10s out of 10. Absolutely, personally. So she's doing a great job. And we really, we really enjoy her being in our community on the inside.
Christian Rodwell 1:42
Yeah. And Carol is an inspiring lady in a male dominated environment, which is development. And this was something obviously that I think was probably a bit of a challenge for Carol. And she she's always up for challenge. She pushes herself. She's hard working. And she's definitely forging her way in the development area.
Unknown Speaker 2:03
Yeah, unquestionably. And I think you can tell from her background, and I'm sure you you dive quite deeply into that, Chris, that she's always up for that challenge. And she's always willing to push yourself to another level and in some respects, has made some mistakes and got some lessons to share. I think with everybody on what happens when you do push yourself, there are some things that you might look back on and go Well, I wish I'd done this differently. And I think we've all got those lessons. And I'm sure we'll dive into those as part of the debrief.
Christian Rodwell 2:34
Absolutely. So we'll be touching on, you know, some of the challenges over the last six months, we know there's been some supply issues. And obviously, we know we're going through a difficult period at the moment with interest rate rises inflation. So we'll see how that's affected. Carol's business. And for Carol as well, you know, I think what will resonate with some people is that desire to have a bit of a portfolio career. And this really resonates with you know, the seven pillars, Kevin, because it's not about relying on one source of income, it's about diversifying across as many asset classes as possible.
Unknown Speaker 3:08
Well, never more important than right now, when the economic wind is so strong blowing in every direction, that the more you can build multiple streams of recurring income from different sources. And by now seasoned listeners will know there are seven unique and identifiable sources. And if you can just imagine, you're building seven robust income streams around you now you don't need seven. But you know, seven is the maximum in terms of this broad out, you know, as broad framework, if you see what I mean, Chris, then the more you have, the more secure you are. And that any one change, or even a number of changes like we're seeing now can irritate you, it can inconvenience you, but it will not devastate you. And wealth is about certainty. And when life is uncertain, you need to create as many sources of that certainty as possible. And then Carol has recognised that I think a unique wealth dynamic is has helped that isn't it? Because I think she refers in the interview Christmas as being a square. And many people might not know what that actually is. So it's usually when you look at wealth dynamics as a tool, and we use that all the time, don't we, in our, in our academy programme, all of our students go through that process. And usually there's an arrow point, you know, you're pointing north, south, east, west, wherever what's unique to us. So you know, I'm creative and connected. So I'm sort of Northeast on the spectrum, but Carol is finely balanced in all of them. So for some people that might think, oh, it's not clear what she is, but because she can turn her attention and turn her quite sharp brain to many, many different aspects. She's well placed. But of course sometimes that can mean There's a gap isn't there in terms of joint ventures and other relationships because you need somebody else who has a stronger edge. So again, all of that comes out what dynamic is very powerful to Chris, I would encourage anybody, whether they resonate with wealth builders or not, you know, that's an independent tool. We think it's an outstanding tool, and we use it
Christian Rodwell 5:19
every day. Yes. Now link to wealth dynamics in the show notes for today. And also the podcast episode, which we did way back when we began in 2019. So if anyone wants to find out more about wealth dynamics, how it works, definitely check out that episode. Yeah. Okay. So we're gonna hear from Carol. Now, she and I'm really, I think, kind of give a good overview for anyone who's thinking about development as perhaps a strategy moving forward. So let's head on to our conversation with Carol Robinson. Carol, welcome back to wealth talk. How are you?
Unknown Speaker 5:51
Yeah, very good. Thank you. How are you, Christine?
Christian Rodwell 5:54
Excellent. Thank you. Yeah, lovely to have you back again. And, of course, our listeners will know or many of our members who are listeners will know you as one of our wealth coaches. But of course, you've got many businesses, and you're an investor. And we'll be hearing about all of that today. But specifically, we're really focusing in on obviously, the work that you're doing as a developer. Now, Carol, and that transition that you made from obviously being, you know, more traditional investor, to a developer, and seeing how that went, and some of the challenges that of course, we have perhaps experienced over the last six months with the economic changes, and just looking ahead at where you see things going. So well. Yeah. Good. Good to talk to you again.
Unknown Speaker 6:33
Yes, good to be here. As always, and I know one of your challenges with me is to keep me to this trait. And I've always got a lot to say about business and development.
Christian Rodwell 6:44
Well, you You're very good at obviously helping our members focus as well as your role as a coach and you've been doing that for a long time. Maybe it's just touch there, Carol, because obviously outside of investing you really love helping others succeed as well, when it comes to building wealth.
Unknown Speaker 6:57
Yes, I do. I kind of a bit unique thing, because obviously, other wealth dynamics is a key part of the wealth programme. And I find it absolutely essential part of you know, building a business and understanding who you are, and your teams and getting the best out of them. And I'm, I'm very much a square. I don't really fit into anything as a specialism. And I think I've always beat myself up about that until I did the wealth dynamics. And I realised actually, I understood who I was, which meant, why I needed to have almost a portfolio career. So I've got the investment side of things. I've running a business developing a business. And I also do a lot of sort of support work coaching and mentoring. So I kind of one moment I'm kind of in that supportive area. The next minute I'm kind of doing deals next minute and being creative on doing the interior design of properties. And then on the other I'm you know, I'm I'm a chartered accountant, I come from finance and banking so that that Sealy element is in me as well. So I used to find it a bit confusing now I actually celebrate it.
Christian Rodwell 8:08
Yeah. So not only have you made the transition recently from investor to developer, but of course making that transition out of the corporate world as well. And when was that Carol, and what made you decide to make that jump in the end?
Unknown Speaker 8:19
Yeah, it was 2015. I was a chartered accountant. And I loved finance. I was in finance and banking, and then I've transitioned over to a slightly different industry in the last couple of years. But it took me around the world, I had an amazing time with it, I did very well. I was in a very senior leadership position. But I always knew there was something else inside me. And I didn't exactly know what it was until I really started investing in in property. And then I guess that allowed me to understand more, who I was what I needed. And then that became the reason I was really doing that was so that when I was overseas, I could come back and have a really beautiful house, I wouldn't be locked out the UK property market. But it took on a life of its own when I really saw how lucrative it can be. And then I realised it could give me options for changing my future life. Now, I would have kept on going in, in finance probably for quite a long time. But, you know, I had a life event that that hit me and it made me question everything that I was doing, and because I had a number of properties behind me, that enabled me to step out and do what I was really meant to do in this life.
Christian Rodwell 9:41
Yeah, yes. So Carol, your role now as CEO of calm group, CA R m. So tell us about calm group. When was that established?
Unknown Speaker 9:50
Yeah, that was established in 2019. So what it was, I guess I'm probably one of those Salvucci There's, so I did the investment got the tick in the box and like, you know what, what's next? What's next? What's going to challenge me next. And a new really, development was the one I had to really go into. I was intrigued by it, because there's two reasons for that. One is that I love the fact of always be fascinated that you can take a piece of mud, and you can turn it into a beautiful home, that whole creative process and the technical design and elements that go into doing that, I just, I found it so interesting. And the second thing is that I just felt it was an industry that lacked a lot of female presence. And I thought it would be really good to try my hand at that. Why is that the case? And is there anything I can do to inspire other women to take that, that leap into something that is traditionally very male dominated? So that's why I why I did it. And want me to tell you how it happened, how I kind of did that good timestamp?
Christian Rodwell 11:05
Because, you know, obviously, what about processes, which which we all know and teach to our members of learning anything new is the wheel of wealth, right? You've got to have some education, you've got to have good support, you've got to have connections, to do your due diligence. So how did all of those pieces come together for you, Carol?
Unknown Speaker 11:22
Yeah, I think my background absolutely laid the foundations for this. So whilst I'm an accountant, I was very much in the commercial side of finance and banking. So working on strategy, transformations, processes, systems, etc. Plus also doing a lot of the commercial side of reporting, to understand how to drive more values out of businesses. So that background helped me understand development quite quickly, and what was needed. Now, what actually happens is that I knew I was lacking construction experience, I mean, people are building sites for for years, or they've got construction degrees, or, you know, surveying degrees, etc, I didn't have any of that I just had the business side, I knew the numbers and knew how the business side of it worked. But I couldn't, I just knew I'd have such a big gap in the construction that no funder would want to lend me. You know, whilst I'm an investor, you know, you're borrowing hundreds of 1000s of pounds. When you become a developer, you've got to 10x app. So your exposure, your risk, the complexities of what you do on a day to day basis, just in a completely different league. Now, whilst mentally I was ready for that, I knew that I just wouldn't be leant on unless I took it very, very slowly and did one little bit bigger one from the other. And I wanted to go in, so I needed to find a joint venture partner. I didn't know how I was going to find them. Who, what, where when I had no idea. So what I tend to do in life is that I go down a path and see where it takes me and see what opportunities are thrown my way. I try and have my eyes open, so that I can see the opportunities coming to me. And I grabbed them, I try them generally, sometimes they don't work. I mean, I knew I needed a partner, but the number of times they haven't worked before. But it's always added to my learning. So going down a path trying something, it's added to my education, it's added to my contacts, one thing is led to another and the path that I originally thought I was going down is led me to something else. So I wasn't afraid of of starting the process and seeing where it took me. And that would show me the gaps that I'd have in order to do this. So up in the north of England, that's one of my investment areas. And I found a scheme that I could build six flats with. So I did my kind of approached it like an investor. And I got started getting quotes from building companies, construction companies, and I had a number of them down in the wall like yeah, yes, we can we can do that for you no problem. You know, the quote started coming in. But then had one company come along and I'd actually met them at a networking event. And they came along and Mike came along who is now actually my business partner so you can see where this went. And he pointed out to me a huge amount of issues with this site. Now, we do develop in London, which is traditionally tight sites, kind of infill sites. If this was on another scale, and yes, things could be done, but the costs would have been absolutely extreme, I would have been waylaid by eight party wall arrangements, you name it, he was just pointing out everything else like, wow, you know, I really have a massive gap in my knowledge. But I thought these guys, if I could work with them, we could really make something together. But you see, I didn't, I thought they still wanted to just be in construction. But as I got to know them, it really turned out that they've been trying to get into development. So they will bring in all the construction expertise, but they didn't understand how development works from the business side of things. And they kept going through this process of going to all these different sites, wonderful schemes,
Unknown Speaker 15:54
being able to put together certain things to do with the construction side. And then the defaults are with the banks. The banks would say, no, they couldn't understand why. Or they'd get it through with the banks, and then they'd lose the vendor. Oh, it was just a cycle for them that was going down. And you can only spend a certain amount of time throwing money after deals because you got to pick commitment fees, there's a management fees, the solicitors, valuations, etc. And I was I was watching, I could see this. So I said to them, Look, you know, you're missing probably what I can bring to the table, and you definitely have what I need. But I have to convince them. And I will also I've been very sceptical about joint ventures whilst I think it's it's very, very important. In order to go faster and probably give you a massive leg up. You've got to be very careful who you go into business with, because everybody's all pally palliate from you never really know what people's true personalities are like, and how they deal with certain challenges until they happen. So I was whilst I knew I needed a joint venture partner, I was quite sceptical about it as well. So I need you to test them out. So we have lots of like pally, pally, yeah, this sounds great, yeah, we're gonna do great things. But I wasn't willing to just, you know, jump in. So I was doing some holiday lights over in Bath went to listed buildings, converting those from one to two beds, had to be done very sympathetically, as you might imagine. So I asked them, I said, Look, I'm kind of interested, but I need to prove what you're like, and how it works, you know, from your side. So they did that. And actually, to be fair, I don't think it went very well, they'll agree it didn't go very well. We have challenges. Like everything. I don't think I've ever done one investment that hasn't gone without his challenges. That's a fact. But you try and control those with your knowledge and your expertise and limit the risk. But it was the way that they dealt with those challenges and issues that we had. And I thought, okay, they've got integrity, the same, they had the same values as I have. And so after that, we're like, Yeah, let's go go forth. And they were like, we've got this deal that's going on, but it's but it's faltering. You know, can you help? And I said, Okay, I hand it over to me. And literally at the top of our managed to, I managed to get it over the line. So this was our first deal in 2019. And I said, you know, okay, I've proven myself, you've proven yourself. Right, let's, let's get all the legals drawn up shareholder agreements, and I was brought in as an equal partner. Yeah, yeah. Yeah.
Christian Rodwell 18:47
So yeah, I think just to pause for a second and just reflect on on the steps there, which I think, you know, important, as you said, you're moving into a new industry, and you didn't know everything. And so that decision that you needed to collaborate, you needed to work with someone, you know, step number one, but then how do you go out and find that person? Well, there's no, there's no surefire method is that it's, as you say, have to take that that step, that kind of leap of faith, and get out there and start talking to people. And perhaps we're lucky that you met someone pretty quickly, right? It could have taken a lot longer than that. And, again, lucky that the first person you kind of felt that, you know, relationship could work with actually has turned out to be a you know, a business partner. So, so yeah, you know, important steps. But you know, you were quite fortunate there.
Unknown Speaker 19:35
And I wasn't, I wasn't very ready to be fair to go to the level that we have done. So, so quickly. But, you know, as I say, you just got to take that leap, go down the path go down the alley. Hopefully it's not an empty one, hopefully, at least two other things. And yeah, that's, that's what I did.
Christian Rodwell 19:54
Yeah. And then how did you decide between you in terms of how you're going to structure the business? What were the deals you How'd you both agree on the I guess the longer term goals of the company?
Unknown Speaker 20:05
Yes. So in fact, originally, we started with three of us. So we did go through a commercial divorce with one of them. So originally, it was three of us. And interestingly, I was doing all the business, operational side of things, which ranges from everything from planning, building control, sign offs, all the legals, you have a lot of legals when you're acquiring when you're selling. Other things that might happen with neighbours, party walls, etc. I do all the design, I do all the finance, looking for deals. And I do a lot of the professional team relationship stuff as well. And I also do quite a bit of the procurement and the contracts, etc. Then I had my other two business partners that were really all about the day to day operations. So it was a bit too heavily orientated on the on the construction side, actually, because you had those two plus a site managers. So when we looked at the business and where we wanted to go, we realised that the third business partner had different needs and wants from the business. So we agreed that he should be wanted to go, we wanted him to go. So it's just, Mike and I now. So we agree on four schemes a year. And, right now we've got about, we've got the holding company, and under that you have a special purpose vehicle for each scheme. And there's a reason that you do that one from a financing perspective, but also from limiting your your liabilities on a on a scheme. And then we also have a construction company as well as part of the group, because we are a self delivery developer. And one of the reasons that we are a self delivery developer, when we come on to talk about some of the challenges is that this limits your risk. So we are the main contractor. So we're not dealing with a third party, where you could have disputes and challenges, variations. So we can control all of that. And the banks love the fact that we are a self defence delivery developer. So for schemes, the way we've got the company structured is is very important for limiting your liabilities, etc. The banks look the way that we're set up. And we do about right now we've got 14 million pounds worth of schemes in play. Now, that's not an annual turnover, because you kind of structure them in a way and you'll have different timelines to that. Plus, you've got the sales cycle, on on top of that, so it's between 14 and 15 million. And then within that you also have the Construction Company, which itself is delivering around 8 million pounds worth of schemes over, you know, a couple of years, really. So yeah, that's how we're, how.
Christian Rodwell 23:04
So I think already listening to karate, it's clear that the step from you know, traditional investing, let's say residential investment up to development is quite a substantial step.
Unknown Speaker 23:16
is massive. It's a massive step up.
Christian Rodwell 23:20
Yeah. So So anyone who's thinking that development, you know, perhaps is the next step for them. You know, what are some of the most important things that you would say they need to consider?
Unknown Speaker 23:31
Yeah, I'm just from talking from my experience, it's, for me, what was one of the most important things was that I did actually have other income coming in. So like any business, when you starting out, it's cashflow hungry, you might have to prove yourself to investors to berets, etc, you need to get deals over the line. So you might not be getting the most favourable terms. So really like my Can I hardly take anything from the business at all. So I have all my investment income and the educational the IP income that comes to me so I, I don't worry that I don't really take anything from the business and that potentially you might be waiting two years to, you know, cash in on a sale, because obviously you pair all you've been dispersed, it's usually the last unit that's yours. In theory, you should be paying yourself from the scheme anyway. It's called a DMA. But, you know, in these times, we've just cut back on all of that, because we're preserving cash, because we have faced some headwinds, and we still expect there to be headway wins in the business so that for me that safety blanket allows me to sleep well at night. The other thing is that the banks will always look for personal guarantees. Because if anything goes wrong from the length of time a scheme goes on, they can put an interest personal guarantee on you In effect, so once your interest was out on the facility, you've got to start putting in every month and on multimillion pound deals, you know what scheme alone that could be 1516 grand a month. And you've got other other guarantees about cost overruns, etc. So it's important, the bank gets really comfortable. And you know, it can be up to 25% of, you know, a scheme that they're looking for. So the fact that I've got properties and other wealth really makes the bank comfortable. So it's another big tech in the box to allow funding to enable schemes to happen. I would say, if you've got a background like myself, and you're not from the construction side of things, you would need a construction partner, the banks are all about the construction skill, you know, the expertise that you have in there, they want your CV, they want to know, you know, if you've got the capabilities to deliver this, and the banks and junior vendors do not like an investor that's jumped up into development into the size of schemes that weren't doing. Because they know that you could have main contractors coming and working with you, and they can play your merry dance. Like they can, it's just the industry, you know, that we're in. And if there's problems on site, and things need to be solved, you know, they might not have the answers as well, so that they're looking for that level of, of expertise. Now, if you are, if you've come from a construction background, that's great, you might be lacking on the other side of things. And I would say having somebody, you know, just you need to build a professional team, you know, that can can fill all the gaps for you. And of course, that that costs money. So you need to be backing that into your schemes as well. If you are happy taking it slower, then it's okay to just do a few little jumps at a time, just keep going higher and higher on the amount of money that you're borrowing and lending and the schemes that you're doing. And you may not need to go into, you know, full joint ventures like I did, you could just go into a joint venture with on that scheme, with a construction company, for example. So I've got in fully joint venture to build a business with a, you know, a business partner, you can do it scheme by scheme, there's also work and I see people becoming, you know, quite successful, doing that kind of thing. So, so yeah, I think those are the really big watch outs for me, really, and I think it's very important, you have a very, very strong finance person behind you. Because where I see a lot of companies not getting it right in this field, is that they're not on top of their cash flow. And if they've got multiple schemes going on, you know, they're taking from one scheme to supplement another, and they'll temper it think in their head, they're doing it temporarily. And it's not, and then it feeds the machine. And it goes down a spiral.
Unknown Speaker 28:21
And I think it's also very important that you're not really taking money out of a scheme, you know, you you are, you've got a lot of money that lands. And it's got to be assigned to the construction over a certain period. And I have seen developers trying to, they haven't got that other buffer. And so they're living a certain lifestyle, they've got to keep a certain lifestyle, and they will be taking too much out of a scheme. So I think those are really, really, really important lessons.
Christian Rodwell 28:53
Yeah, yeah. Now, the last three years, Carol, we've had Brexit and we've had the pandemic. Now we're moving into more uncertain economic times, with lots of changes going on. What have been some of the challenges? I know, there's been difficulty with supplies and perhaps with tradespeople as well. You know, how it how's that affected you?
Unknown Speaker 29:14
Yeah. So, um, I'll start with a lot of the challenges that that we've we've had, I probably got about seven, I think I did make a note of them. I'm sure if you I could probably go on for a lot longer. And I think last time we spoke I was actually on site wasn't a my high days. And I'm literally gonna go down to site now because I think we're in a period where, you know, I'm having to roll up my sleeves, a lot more than I would have been before. So, so broadly, I've said our strategy, our goal was four schemes a year we're doing it around the beta London and Hartfordshire area, and we're pulling back, we're pulling back to do two schemes until things stabilise and I'll explain why. And broadly, it's It's around, making sure that everything's stable. We've built upon our treasurer tech chest of cash, you know, to weather the storms. So I'm gonna go straight into, yes, broadly, we've kind of limiting our exposure and reducing the number of schemes that are going on. But I'm gonna go quite into 1234, if that's okay. So the first thing I've already sort of mentioned in that, as a business, we buy sites with planning on it. And that's because we want to remove the rest of the planning risk. Now, yes, we give away quite a bit of money, because we're buying things with planning on it. And we know that's where you get a massive, massive premium on taking some land and getting some planning on it. We're a soft delivery construction company. And so we put the golden goalie, what's important for us is that we're going through developing sites, and we churn through those, that's why we have four for a year. In fact, it's quite hard to achieve that. But it's important to as we go through this quite rapidly, if you're doing planning, you might be planning for two years, we did do a little bit of planning. And it definitely it was on a site that audience had planning. And the planning had lapsed, and I only needed to get the plumbing, rejuvenated, refreshed, and it still took two years. So I'm not in the business for waiting for all of that, and putting in loads of cash and money up front on that. And, you know, having to go to appeals. Now I want to get in, I want to get into the murder, I want to make beautiful houses. So we remove quite a bit of that waste of time and risk so we can get straight on. Now, in this comments, it's actually very hard to find schemes that are working. So that's another reason that we've pulled back a little bit. The reason for that is because when you're doing your financials in the most simplest terms, and I think investors will understand this is that it's the cost to buy the site. It's the cost to do the construction. And then it's what the end value is going to be. Now the end values have been growing exponentially, which has been great. I think they're stabilising right now, the construction costs have gone up massively. And therefore, really, the cost of the land because of the construction issues that we'll get into the cost of the land should be should be cheaper, really. Yes, it's taken account of some of the increase in sales. But we're taking a timing risk. And we have a view of the economy and the sales prices as to what's going to happen so that we can't bet on the ever increasing prices of the gross development value. So in our mind, the vendors need to be adjusting their prices to reflect probably stabilisation of the end sales prices. And the ever increasing inflation supply chain issues all around construction. We're not seeing that that hasn't filtered down into the market. So we're finding it actually quite challenging to make the deals work.
Unknown Speaker 33:32
And there's obviously a lot of competition, more competition over the deals that do work. Now on top of that, you've got interest rates that are increasing. So the financing costs and multimillion pound deals is obviously rising as well. So we need to keep a watchful eye on that. As far as buying the schemes. Now, buying the sites with planning is very good, because you get a site that's kind of ready to go as soon as you've completed. But the issue is that when you buy from a pure land developer, is that they've put in the basic plans in order to get the planning. We have to take those and put building, building our construction drawings around their technical drawings. And often it's not until you do those, that you realise that a certain element of that scheme isn't buildable or it's going to cost you a lot more. So we do take on that risk. However we do push it pass it to our professional team, the architect and the structural engineer to make sure there's nothing that we're missing when we're doing our financing. Right I guess getting to the crux of everything we talk about supply chain and costs. So we set up our business in 2019 and we quickly went into COVID Brexit but we do know that the government supports house builders and construction because we were one of the industries They said, Just continue as long as your teams are happy and you're happy, continue. And we did, because we have COVID. Policies. Plus, also, you're predominantly outside. So, you know, it was quite easy to comply. But on top of that, we had HS two, that's taken all our steel and concrete, East West railway links, lots of infrastructure, you know, the government likes to spend on these things, when there are challenging times, to keep the economy going. So whilst they want all these massive targets, on building houses, they're also doing lots of other infrastructure. And there's only a certain amount of skilled labour that can can do this type of work. There's only a certain amount of bricks that we make, there's only certain amount of concrete and in cement, and steel, so our prices have been hyperinflation me you know, we had a one of our schemes with price 20,000 in for the basement carpark the roof 23,000, we were getting in quotes of 150,000 pounds, we managed to get down to 79,000 pounds. But oh my god, that's a lot of money to absorb. So you know, you have to have the contingencies. We used to have 5% contingencies with the banks, because they liked all RX, Mike's got 38 years of experience, actually not think it's like 35 Actually, years of experience. So they were letting us get away with 5%. Now we have to have a minimum of 10% kitchens have gone up 68%. You know, that we buy, we make sure we do quite boutique properties. So we make sure we spend on on kitchens and things. So that's been very challenging from a pricing hyperinflation perspective in my mind. So a lot of my time and my time were value engineering. But you've got to be careful that you're not shopping for the best price. But then you can't get it to site for a while, which then has a downstream impact on your programme. Now, right now, on one site, I'm paying 1000 pounds a month on interest, because we're just at the end. So we've got all the highest borrowing that we've got. Plus, we couldn't deliver on time, because of all those challenges. So we've got a bit of default challenges interest rates in there, too. So there's no point shopping around for the absolute bargain where you've saved 1000 pounds, but it delays you for two weeks. Because then I've just had, you know, 14,000 pounds hit to my bottom line. So it's really, really important that you understand the trade offs of buying cheaply. But the downstream impacts, you know, on on with the banks, and the funding and the cash flow. This last Saturday, I had labourers assigned to a site. And I went and they're like, oh, no, we've just been offered 450 pounds per day. So we're not going to be working for you today or the next few days. But we'll come back, you know, and it's that 450 pounds a day when really, they're about 150 to 180 houses a day. So you're constantly having these challenges of trying to persuade people to stay on site, and what you can do with them.
Unknown Speaker 38:34
So then you move on to the financing, because the downstream of all of this is you're delayed on your scheme. So that means that you can have to have extension fees that you've got to pay. You've also got to every time you do a refinance, maybe because maybe that original funders like why you've had to extensions, my credit committees saying we need to pay it back now. And also, it can be cheaper by refinancing. But you've got to go through legal costs for the funder for yourself, you've got to have revaluations, then you've got other fees, professional fees, administration, due diligence fees that they want to charge. So a developer is having to absorb a lot more of these of these costs. However, we're going into quite an interesting period, aren't we? Interest rates are going up so people aren't affording what they thought they could afford. A few months ago, six months ago, were helped to buy on a number of our properties, not all of them a number of them, and helped Tobias finishing in October. They've got to get all their paperwork in by the beginning of October. So what does that mean? Is there going to be a frenzy like there was with a When stamp duty was going to come back in, that's what we're hoping. But I'm not seeing that activity. Because I think people a little bit fearful with what's going on with the economy and what they can afford, and Help to Buy of paying more stringent affordability checks as well, literally at the point of exchange to do with a second check. So our view is that all our base case, for the themes that we're in right now with ginger and COVID, and Brexit, so they were very conservative anyway, like, really, really conservative. So we feel quite confident in what our quest development value is right now. But will it go up much more? No, I think there's going to be a stabilisation. And whilst it's a shortage of homes, we we do believe that it's going to be held up because of because of that, and in the areas that we are in. I think we're in the right areas that the right product
Christian Rodwell 41:03
case. So obviously development, there's much longer timeframes for things, there's much bigger budgets involved, as we've heard, there's more risk, there's more moving parts, there's lots of things that can can happen, Carol, but of course, you're doing this for a reason, which is obviously to help you build your own personal wealth. So whilst there's definitely more challenges by the sounds of things with with development over, you know, more traditional residential strategies, what are the benefits? And how does that, you know, work in with the rest of your wealth plan?
Unknown Speaker 41:34
Yeah, so I think when we think about the wealth plan, you know, we talked about the seven pillars, etc. So this is very much one of those pillars. But it's like a little ecosystem, I think, when you build a business, because you've got the business itself, that will have value, ultimately. But also, you're drawing money from that business, so then that can be reinvested in some of your other strategies. So one of the key things for me is the pension contributions. So putting that into my SAS, my small self administered scheme, which I'm a huge advocate of, because that enables me to be the bank in effect. So it's a cash efficient way of taking, you know, it's a chargeable expense to my business. And I can put 40 grand a year, and I guess, if you haven't done any over three years, you can put like, 120, if you've got that much cash to boost your, your pension pot, and then I'm able to lend that back to myself. So you would have heard through my conversation very much about being dependent on bankers and funders, etc. Now, we are going to be doing one scheme in the north of England, yes, it's a smaller scheme, it's four houses. But obviously, it's a bit cheaper up there, but I'm going to be able to do that, or from my from my SAS. So that means I become the bank and I, I take out a lot of the risk and the extreme high interest rates. And, you know, there's the phase, you know, everything that comes with being beholden to a bank and the stress and the worry of being beholden to a bank. You know, I talked before about, you know, I feel like the labour I'm, you know, the, they're my customer, and I also feel like I work for the bank sometimes. So to me, that's very important to get them out, used by SAS to fund that, it builds up my pension pot, plus that scheme, there's will be a bill to rent, so they will be getting added to my portfolio property portfolio. Anyway, and actually, even on a couple of the schemes that we're doing, I always contemplate whether or not I want to build every one of them into my scheme, which I can do, because the equity side of it that you would normally be putting in, you know, with your 25% deposit that can go in as my, my Directors Loan and so when all the cash comes in from the rest of the scheme, that would then pay down, you know, that Directors Loan. So I think from a, it's like a self fueled wealth building mechanism, I believe having a business. So it opens up a lot of doors. And then on top of that, I'm a Christian. And Kevin, we've been in conversations about doing some more IP around jumping from investor to developer. And, you know, being a relatively small developer, you know, three or two to four schemes that say, a year given that we're just pulling back a little bit, and helping people take that jump to be a developer, and manage those risks, putting some IP around all of that. And of course, I can't really do it without saying that I've done it myself. Can I say that again? The business the proof of a successful business and the schemes under my belt will enable me to then do all of the IP around it. So it feels my investment it feels building a business with ultimate value, it gives me day to day. It'll give me a big cash pot at the end to invest in other things, enables me to put money into my SAS, which builds my pension. But it's also helping my day to day business become less reliance on third parties. Yeah, sorry, enough. Well,
Christian Rodwell 45:24
that's great. So if anyone wants to kind of watch, you know, the videos, I know, you always record and post when you're on site and you sharing lessons, where's the best place for someone to connect with you online?
Unknown Speaker 45:38
Yeah, if you go to YouTube, you can go into com group. And we it's between two to four videos a month. And it's the video with Mike and I how we bounce off each other, you can see our two different wealth dynamics are and while we actually work? Well, as a team, we try to have a bit of fun with it, talk around the mistakes, we've made some of the things that have gone well reflected on the week, you can see as literally live on the site, so you can see how they're progressing. So I think they're quite good. It's just like a couple of minutes, little snapshot. So I think that's the best place to kind of see, see us get to know us. We've got a website, www calm group.co.uk. And if anybody wants to contact me, that's Carol outcome group.co.uk. We do have Facebook as well, and Instagram, but I'm not as active on that as I should be. So we are in talks to be a bit more prolific on that. And you have to wonder why we're doing that. And that's really to give banks and funders proof that we're credible company to invest with is that's that's the main reason we do all the social media.
Christian Rodwell 46:55
Yeah. Great. Thanks so much for sharing all of your insights and knowledge today, and best of luck with the future.
Unknown Speaker 47:01
Yeah, thanks very much. And I hope to see you soon, you will take care. Hi, everybody. Thanks for listening.
Christian Rodwell 47:08
Right? Very interesting to hear Carol talk about how she's made that transition from investor to developer, certainly a very different ballgame. And there was a lot of things that Carol obviously, I guess, brought up that anyone who's thinking about filament as a strategy should really consider and we touched at the beginning, Kevin, about the importance really of, of knowing yourself, what are your skill sets, what gets you into flow? But I think when you're moving into any new business, you really have to look at the gaps. And often partnering with someone else is a very smart idea when you're starting out.
Unknown Speaker 47:47
unquestionably the case, Chris, I mean, I think I was recently on a podcast as a guest. And the interviewer said to me, you know, what was the biggest mistake you made on your wealth journey. And, and I learned probably two of those. But the, the one that's relevant here was, I didn't really seek out the guidance of others. You know, it was almost like DIY, I think I was a bit of a DIY er at the beginning, Chris, and wanting to do things myself, but Carol has been brilliant, in that she seeks out connections, she's, you know, she's very open minded to that. And of course, that raises its own challenges and, and issues, but nonetheless, always looking to work with other people, because the path has always been drawn ahead of you. When it comes to becoming more able to build your wealth, you have to distance yourself from where you were at the start of your wealth journey. In other words, you get bigger, stronger, better. And that means better education, better support, better connections, and those connections often come from people who are further ahead on that journey than you are. And smart lady has picked that one up.
Christian Rodwell 49:01
Yeah, and that reminds me I forgot to read out a review from Trustpilot, didn't I but it leads us nicely into a review that we've had in recently from Arrow arrow of course is one of our wealth builders Academy members. And you know if you're listening and we'd like to find out about the wealth builders Academy, then then head over to wealth builders.co.uk forward slash Academy, you will be able to see everything that we do to help people move from financial insecurity to financial independence. But Errol says I failed in my previous attempts to grow my wealth mainly because I lacked support the right knowledge and structure and wealth builders have given me those three critical elements which has grown my confidence to take action. And thanks to wealth builders, I now have a clear plan. And by following that plan, I No absolutely I will achieve my financial freedom goals.
Unknown Speaker 49:53
Only. I think there are two words there Chris that I would like to highlight and thank you for all for, for sharing one monitor You're absolutely confident that those words, and when you know absolutely, and you're confident, you will achieve your your outcomes. So the thing that holds people back is often some form of fear, right? Something in their brain prejudges the outcome, but if you see that somebody else has already achieved it before you and you can see a path that's laid out, well, you just follow it, you don't really need to second guess it anymore. Because the pathway is already there, just put one foot in front of the other, so to speak. And, you know, Carol has done that she's she's always sought out those connections, particularly those who are more ahead than her on the on the development side, because that's, that's a tough thing. It's a tough step to take from doing residential projects, to much more lucrative, but potentially more risky projects.
Christian Rodwell 50:55
Yeah. And I think there was another important lesson there. In that Carol mentioned, she had that security of those income streams already coming in, which meant that if her new project, obviously moving into development, if that took longer, or if it perhaps didn't go to plan, it wouldn't leave her in a really desperate situation financially, because she already had that buffer behind her. And I think sometimes people might not have that, and then it can cause all sorts of issues down the line.
Unknown Speaker 51:23
That's a great point, Chris. And I think that that's why there's always a milestone on the wealth building journey from insecurity, as you mentioned, at the beginning, from insecurity to independence, but there's a milestone in the middle isn't there. And we call it financial security, when you've got enough income that you can rely on, coming from assets you've already built. And then that gives you not just the freedom to put more time into it, which is often the thing, that's the key, particularly for employed people. And we see people negotiate their time, don't they, when they get to security, they get, you know, different ways to bring more time into into play, but also to upskill themselves. Because whenever you're doing serious projects, like development, it takes longer here, it isn't something you can do in three weeks, and six weeks or nine weeks, you know, these things can take 18 months, two years and even longer in some cases. So you need to have the income because it takes so long for that high profit to or potentially high profit anyway, to come back to you. And the other point, I think was good about what Carol was saying. Because these projects do take a long time. And one of the biggest costs in development, Chris is the funding costs. And the more that you can take control, or the more that you can reveal sources in your life where there's funding, both internally in your own finances and externally with private investors and becoming investable. And we've done podcasts on that before Chris as well. I think getting access to funding is also critical at a time like now, when we're seeing interest rates on the rise where banks are taking a bigger margin. Underwriting is getting tougher, we're actually seeing lenders withdraw schemes, and interest rates rising. So it means there's more pressure on the funding of something particularly over a longer period of time. So as she's done, and like so many of our Academy members have done, Chris, they've used their pension as a source of funding through through the vehicle we've often shared called SAS or the small self administered scheme, basically taking complete control of your pension and removing it from the industry, and treating it like a business for yourself. And I think it's a very, very powerful strategy. And as an accountant, she recognised that, and immediately when she saw the benefit, so it was a no brainer and took advantage of that. And then that standing her in good stead as needed for many 1000s of people now that we've helped on that journey.
Christian Rodwell 53:59
Yes. So hopefully, they're we've been able to, you know, uncover a little bit more behind the scenes of life as a developer and that transition from, you know, other more traditional properties, investing strategies. And as we know, Kevin, you know, everyone might follow the same recurring revenue roadmap, but everyone's plan will be individual. And it all begins with knowing yourself and wealth dynamics, as we mentioned, and, and the outcome, your end, you know, reason why so, so many factors determining, obviously, the exact, you know, way that you'll reach your financial independence. But, yeah, a clear, structured process that we certainly can teach people. Well, I think
Unknown Speaker 54:36
that's the bedrock of the whole thing, Chris, what always fascinates me about how people build their wealth when we created the nine step, recurring revenue roadmap, and it looks like oh, well, it's nine steps and everybody follows those nine steps, but in reality, it's the complexion and the colour that people bring with their own relationships, other people's relationships, their own differences and the multiple the multiple doing things at the same time. I often liken it to imagine, you know, you had 100 school kids in a room. And all you had was a room full of Lego and said, build me a house. And you know, you've got two hours and just go play and do it. And you get houses, and they'd all have a similar construction. But they'll all be completely different. The bricks will be different, the windows will be different places, wealth is just like that. It's like building Lego. It's like everybody's different. And why it's so fascinating for us, Chris, to pull those Lego bricks apart and try and share that with other people. So that they can see that for themselves. Because we all see life and wealth through a different pair of eyes. And often it's better when somebody else can show you what they can see. Because then you're seeing wealth into 360 Not just the usual angle, straight ahead of you that you're looking at things, which is why we call it tunnel vision. You know, you're looking at it like this, but this, there's everything around you that other people can bring to the table. So that's an old van waffling on about the importance of, of connection and the importance of community. And I think now, my lesson, don't be a DI wire. Don't be a wealth waster. That's a new one. Chris, I'll talk to you about that later. Somebody said that to me. Just the other day, Kevin, I've been a wealth waster all of my life, not a wealth builder. never had that before. I'm taking that one. And we'll be using that to try and help people focus and actually talking about that. We are focusing on at the moment trying to help people in these troubled times to to focus on trying to find, make, save and compound their way out of this trouble. And I'm sure you can signpost people to the challenge, Chris that while it might be running for six weeks, there's no reason for anybody not to jump on it because we recorded everything and those lessons of the community and their savings their unique things that they save money on or they find ways to make more money. They'll they'll come rushing into your life that you can pick up things that we never even dreamed people will do Chris and that's what still makes it fascinating for me after all
Christian Rodwell 57:11
these years. Yeah, absolutely still time to join us in the challenge wealth builders.co.uk forward slash challenge have their check out all the details jump in. And yeah, we will see you there and Kevin, we will be catching up Same time, same place next week.
Unknown Speaker 57:26
We will and until then my friend so yeah.
Unknown Speaker 57:31
We hope you enjoy today's episode. Don't forget that we are constantly updating our resources inside the wealth builders membership site to help you create, build and protect your wealth. Head over to wealth builders.co.uk/membership right now for free access. That's wealth builders.co.uk/membership
Transcribed by https://otter.ai
Property developer, investor and WealthBuilders wealth coach, Carol Robinson has a true passion for navigating people through the choppy waters of life and property investing to a place of true wealth on their terms.
She has been investing in properties for over 15 years, building a large and diversified portfolio across many property investing, acquisition and development strategies, as well as, using creative financing.
Wealth is about certainty. When life is uncertain, like it is right now, you need to create as many sources of certain income as possible and this is what Carol has done.
Tune in to hear how and why Carol made the transition from an investor to a property developer, the challenges she has faced and why she feels being self-aware is an essential quality to have in property investing.