From £3k to

multimillion pound
R2R business
The attraction of predictable cashflow
after the financial ups and downs of
an international music career.
Interview and words: Phil Saunders

S
imon Smith was born and raised in Derby in the Midlands. He
always had dreams of being in the music industry. When he came
to choose where to study for his degree, he chose London, moving
there to study business. But Simon had big ambitions for a music
career – he wanted to go global, and London was the perfect place to start.

We all have dreams and Simon is one of those people who chases his dreams
until they become a reality. He built his reputation in our capital city and his
music career grew in the eight years he spent there. For the last two years of
his career in the industry, he finally achieved the success he was looking for.

Simon has had great success as a singer songwriter, commuting back and
forth from LA on a regular basis, in the end collaborating with many famous
names including Britney Spears, Paloma Faith and Example amongst many
others. He toured the world, he met with celebrities. It sounds ideal. But
underneath the glitz and the glamour, Simon wanted more.

Motivation
He had always had an interest in
property but didn’t have the means
to access his passion. Yet like
most successful investors, Simon
eventually found a really strong
reason why, the core driving force
behind taking positive action. One of
the problems he found in the music
industry were the fluctuations in
income. “When things were going
well they were going well, and when
they weren’t, they REALLY weren’t!”
he says.
Simon had also recently got married
to his lovely wife Lucy and wanted to
settle down, and not have to travel
quite so often. This is something I
strongly relate to. So he researched
and explored many different ways
to create the income he needed,
including cryptocurrency and the
share market.
Luckily for him (and for us) a chance
conversation with one of his oldest
childhood friends led him down a
different path. A friend had recently
completed his latest property project
– an HMO project on Ashbourne
Road in Derby. It took three attempts
to finally get Simon down to view it
but eventually he wandered down to
take a look.
At this point Simon had no idea what
an HMO even was, but when he
turned up the project really piqued
his interest, especially when his
friend explained that it would be a
student HMO, it would rent out on a
room-by-room basis and estimated
the cashflow it would generate.
“The idea of having that passive
income coming in every single month
would give me the stability to be able
to carry on doing my music whilst
having that fundamental income.”
Simon was sure this was what he was looking for.
He got himself educated in property and absorbed
as much information as he could. He signed up for
some courses and learnt more and more each day.
He raised as much finance as he could, even selling
his beloved BMW to raise capital to invest! Setting up
Hands-Off Properties Ltd, he scraped together every
penny he could, and it was just enough to purchase
his first property. A two up, two down house in Derby
that he converted into a three bedroomed mini-mo
(small HMO with less than four rooms). After the
work was done, this generated £600 per month
in profit, which proved that all the theory that he
had been learning for the last few months actually
worked.
“When I started seeing the income coming in from my
first property, I thought this is it, this is what I’ve been
lacking. This is what I’ve needed.”

161 33
Switching to rent-to-rent
He was overjoyed and couldn’t wait to
do his next deal. Except … he’d run out of
money. But Simon isn’t the sort of person
to let a simple thing like that get in his way.
He was hungry for more deals and started
exploring other ways to get them, looking
into the more creative strategies like
purchase lease options and EDCs. When
he saw the simplicity of the rent-to-rent
model, he knew that this could be a really
winning strategy for him.
“Rent-to-rent was the answer for me
because I needed less money and could
continue the progression in the business.”
He had £3,000 left to invest and he quickly
found his first rent-to-HMO. He got a
further loan of £3,000 from a friend and
used £1,000 from a credit card to do the
deal and set up the property. But Simon
was far from finished there. He soon The very first booking was for five guests
found his third deal, this time a R2SA
opportunity.
Never a man to turn down a good
opportunity, Simon used the cashflow
from the first two deals to pay for this
project, now his third within just a few
months. The man was on a roll. Funding
proved to be his next challenge as he is
especially talented at procuring these great
rent-to-rent deals, with no shortage of
projects. By the time he got to his third deal
he had persuaded a friend to JV with him
on the project.
This was the very same friend who This deal came through a marketing
showed him around his own project
on Ashbourne Road just a few months
previously. (I wonder what he must have
thought about the surprising escalation
of his friends’ activities!) Simon was still
finding these deals and needed ever more
funding but, a popular man and never short
of friends, one of his close acquaintances
agreed to lend him £20,000 on a 10%
interest rate per annum. A nice chunk of
cash to work with.
Case study
2-bed R2SA
Derby
campaign. A landlord about to complete
on this property, his next purchase, and
contacted me to enquire further about our
services. The day he got the keys, I took a
look and made an instant offer. The very
next day we had the keys and were ready to
go. That’s what I love about rent-to-rent!
over 31 nights – for a whopping £4,597.65!
It turns out that this landlord was a portfolio
landlord; he is now bringing his entire double
figure portfolio over to Hands-Off Properties
Limited. Four weeks later we got keys to two
more and we expect to receive another two
of his properties over the next four weeks.
Type of property: Townhouse
Acquisition and £2,500 – paint,
set up cost: décor and
furniture
Open market value: ca £220,000
Total money in: £3,000
Personal money in: £3,000
COST OF WORKS
Duration of project: 10 days
Total costs: £3,000
INCOME
Monthly income: £105 nightly rate, net
after commissions and cleaning
Max occupancy income £3,150
75% occupancy £2,362.50
Monthly payments to landlord: £700
Monthly costs: £500
Net monthly cash flow: £1,950 @ 100%
occupancy (current guest staying 2
months, so hitting this)
£1,162.50 @ 75% occupancy
% Return on money left in:
At 75% occupancy, all money out in 2.5
months, then infinite return
Case study
4-bed R2R HMO
Derby
The landlord of this property is based
on the other side of the world (Australia)
and was tired of letting agents selecting
tenants that would cause damage to the
property. Furthermore, tenants tended to
only stay for six to 12 months, meaning
they were constantly being hit with voids
and large refurb bills through the letting
agent, who would also charge extortionate
commissions on top of the cost of works.
The owner found us via our website. Through
a number of Zoom calls we assured them we
could take on all the strain, guarantee their
rent and even do the latest cosmetic refurb
to the put the property back in order.
Two years later and we’ve guaranteed their
rent for the entire time, including during the
pandemic, and they are able to enjoy their
retirement in peace. Now that’s #handsoff!
Acquisition and £4,000
set up cost:
Open market value: £300,000
Total money in: £4,000
Personal money in: £4,000
COST OF WORKS
Duration of project: 10 days
Total costs: £4,000
INCOME
Monthly income: £2,200
Monthly payments to landlord: £1,000
Monthly costs: £500
Net monthly cash flow: £700
% Return on money left in: his first year, Simon managed to secure
Break even in 5 months – then 20 rent-to-rent deals. In 2020, that
infinite return
A period of rapid growth
What I am about to tell you sums up
the power of rent-to-rent perfectly.
Look at your own strategy and imagine
how many deals you could do with
£20,000. How long would that take?
Simon used this funding to steamroll
through five deals in just seven weeks.
All great cash flowing units with plenty
extra to pay back his friend’s loan with
interest.
“It’s been a rollercoaster to scale so
quickly.”
This brings his total portfolio very
nicely to nine units – one SA and eight
HMOs, including his own original
purchase. This portfolio was now
bringing in a healthy profit of between
£8,000-10,000/month! Very nice.
Yet he wasn’t finished there. In total in
number grew to 26. On average that’s
one every two weeks! An amazing
achievement.
I was intrigued by just how Simon
managed to scale to this extent so
quickly. Firstly, what help did he have?
I was surprised to find out that for the
first ten deals he did, he was mostly
on his own. His wife Lucy and other
friends and family pitched in to help
set up the houses, but Simon did all
of the property management himself,
only using contractors when he needed
some expert help or for the ongoing
maintenance issues.
“I got up at 04:30am every day. Yeah, I
worked really really hard. But you know
I just knew that what I was doing was
good so I kept going.”
One of the key people in the business
who was there from the start is Paul
Gibbon, who has now become Simon’s
maintenance manager. Paul helped
Simon hugely with setting up the
properties and helping manage the
ongoing maintenance. This has grown
into a virtually full-time role for him.
The next key person to get on board in
any project is obviously your better half
– and it didn’t take long before Simon
had enough cashflow to bring Lucy
into the business full time. Once Simon
got to 20 units, there was enough
confidence in the business for her to
quit her job and join the fun and games
full time. A huge benefit which allowed
the business to grow even faster. But
it was still hard work for the pair doing
virtually everything themselves. Simon
still remembers them both shopping
for set up items. Walking down the
aisles of the local shops with two
shopping trolleys EACH full of plastic
plants, linen and cushions. “It was
everything but passive.”
 Finding the right people
Simon continued to hire all the people he could but given how fast the company was
growing, it was a huge workload and in the earlier days they didn’t hang around too long.
He struggled to retain the staff he needed early on, resorting to getting family and friends
on board when he could. People he knew and trusted and who in turn, wanted to see
Simon have the success he wanted.

This culminated in Simon eventually bringing his own mum into the business. Carole
worked in retail, one of the sectors hardest hit during the pandemic. During the first
lockdown she was made redundant as her company was struggling to stay afloat. Simon
Case study snapped her up in a shot and Carole quickly became the new SA manager.

R2R HMO
Derby
I sourced this property while “driving for
deals” in my goldmine area. One day I saw
a tradesman on a ladder outside a lovely
Victorian townhouse and after initiating a
conversion I was invited in to take a look.
It was pretty early on in my journey and I
couldn’t believe how great this property
was … nor how I could control such a large
property without the big initial investment.
At the time, the landlord had their own
agent that they were very loyal to, but after
them not managing to find tenants and me
popping in a few times, we eventually agreed
a deal! Since then I’ve gone on to build a
great friendship with the family and have
taken on more of their family’s properties.
This landlord had spent tens of thousands
on creating a high-end seven-bed licensed
HMO, but missed the student market and
needed another solution.
Acquisition and set up cost: £500
Open market value: £380,000
Total money in: £500
Personal money in: £500
COST OF WORKS
Duration of project: 5 days (no There were so many motivated landlords
works required)
Total costs: £500
INCOME
Monthly income: £3,500
Monthly payments to landlord: £2,000
Monthly costs: £500
(student HMO – no council tax)
Net monthly cash flow: £1,000
% Return on money left in: allowed many SAs like Simon’s to remain
Break even in less than 1 month – sustainable throughout the pandemic.
then infinite return
Covid worries and outcomes
The growing success of Simon’s company
was touching everyone he knew. But how
did the business manage to survive the
crisis? Well, it was certainly a concern. He
still remembers waking up at 03:30 am
just after lockdown, realising he had over
£20,000 worth of rent to pay on a monthly
basis. Just how was he going to keep all
the properties he had worked so hard to
build up?
Well, at this point his portfolio was
roughly 50% working professional
units with the other 50% split evenly
between SA and student HMOs. So,
as he did, let’s tackle each of these
potential crises in turn …
Now before we begin, I will say that
Simon is a very ethical investor and as
such anyone staying with him who was
genuinely struggling to meet their rent
could negotiate a reasonable payment
plan with him, which did happen in a few
circumstances. But in the main this wasn’t
necessary. With 50% of his tenants being
working professionals, the vast majority
qualified for the furlough scheme or were
able to carry on working from home.
This was great news as that was half the
problem solved in one go.
The rent-to-SA properties were a little
trickier but as most city centre SA
operators will testify, there was actually a
surprising amount of construction work
that was classed as ‘essential’ which
The only remaining challenge therefore
was the student HMOs. Fortunately, most
students paid for their entire academic
year upfront. Most of them were locked
into a contract as well so there wasn’t
really much of an issue for Simon to deal
with there. Of course, there were always
a minority who fell into some difficulties
but as previously stated, he negotiated
payment plans with all of them which kept
his cashflow running.
Now the worst of the pandemic is over,
things are improving even further, with the
students in the majority able to go back
to university for face-to-face lectures.
Many are still craving the experience
of university life, so most student HMO
investors are seeing a gradual return to
pre-covid occupancy levels. “The student
market is recovering really well.”
Contrary to most other investors, Simon
saw the Covid crisis as a huge opportunity.
who for the first time had empty properties
and a problem that needed to be solved.
How to cover their rent? A lot of these
landlords were ideal targets for Simon’s
business, and he used that opportunity
and the large cashflow from his business
to take on some of these properties.
He refurbished them where necessary and
got them tenanted. Often he was able to
turn a tired student HMO that was empty
into an up-market professional HMO.
Leaning into the market that still had good
demand during the crisis.
 Onwards and
upwards!
By using his skills and continuously
reinvesting in the business, Simon has grown
a massive rent-to-rent business in three
years. The business has gone from strength
to strength, growing exponentially with scale.
With a yearly gross revenue of £600,000
he has managed to employ much of his
family including his mother and his wife who
provide continuous help and support.

Simon is now using the profits from the

business to buy his own portfolio of HMOs.
He has built a portfolio of six properties in
his own name generating £10,000 of revenue
per month in its own right. In the next 12
months, he plans to double the revenue in his
business to over £1m and continue to buy
more property that he will own himself.

Contact
For anyone that is interested in the rent-to-rent
model Simon offers coaching, training and advice.
See www.simonsmithonline.com for more info.

Listen to the full

conversation with
Simon here.
https://bit.ly/3l97WzR