In this episode, Legislate meets Radhika Shah, property entrepreneur specialising in HMOs and Buy to Lets. Alongside her investments, Radhika is a property educator, sharing tips and advice through her Youtube and Instagram accounts.
In this episode, Radhika tells us about her journey into property, how to manage long distance rentals and provides us with key insights into how contracts, if they're not for solicitors, shouldn't be written as if they are.
Learn more about Radhika Shah.
Learn more about Legislate
Charles Brecque: Welcome to the Legislate podcast, a place to learn about the latest insights and trends in property, technology, business, building and contract drafting. Today, I'm excited to have Radhika Shah on the show, a property entrepreneur specialising in HMOs and Buy to Lets. Radhika is also sharing property tips and education via Instagram and YouTube channel so this is going to be a very exciting episode. Radhika welcome to the show. Please can you introduce yourself!
Radhika Shah: Yeah. Hi Charles, thanks so much for having me. It's a pleasure. And I've been seeing all the great work that you've been doing and yeah, that's me!
Charles Brecque: Great. You are in property, you're an entrepreneur. How long have you been in property and what got you started?
Radhika Shah: So, I've been in property for three and a half years. I keep saying three and a half years, but I think it actually is three and a half years now. I randomly stumbled across an Instagram post and just started educating myself about it. And then my aunt who's also in property and who are now my business partners were looking at various properties. They have great connections as well. There was an opportunity for me to buy my first investment property, literally like three months into me even understanding what property is or like the investment side of property anyway. So yeah, I started really quickly and I was grateful that I had a really good support system around me.
Radhika Shah: And then we decided to buy our own properties at the start and then I dunno, maybe like it was timing or anything like that then we just decided to say:" Hey, let's do this together and make everything easier." And yeah, we just started a business together. Then we bought a few properties since so yeah.
Charles Brecque: Great. And what's been your favourite moment so far?
Radhika Shah: I think, my favourite moment is when we finally got the keys for our first HMO which was a bit of a roller coaster. There was a few properties on the go, we'd lost out on a few properties. I think we had about six or seven properties that just didn't go our way. And it was like the first property that we really wanted to make work. And I think there was just so much behind it, so much emotion behind it as well. And it's quite devastating when you're so close on exchanging or anything like that, or like getting a property and it just doesn't go through. So yeah just getting that first HMO with my business partners.
Charles Brecque: Well done and what are the key reasons that a property can not go through?
Radhika Shah: So many reasons. It literally could be anything- the person decides not to sell anymore. Until you have signed a contract, the property is not yours. So anything could happen. Anything in the searchers could happen. You might not even have the finance for it, especially when you need to exchange. Some people might not have the finance, but anything could go wrong or you might just decide, you might want to pull out as well. You might have a better deal or anything like that. So many reasons.
Charles Brecque: I see. And what would you wish you'd known before starting three and a half years ago?
Radhika Shah: One thing is. The planning permissions per council because it differs between every single council. And there was two properties that we were going through planning permission. And obviously as an investor, you do put in the risk and you do pay for the planning permission, but unfortunately, Peterborough council aren't that open to more than a six-bedroom HMO. So we did waste- not waste two planning permissions. If we knew that before, we probably wouldn't have gone through that process and focused our time on finding just 6 bed HMOs rather than going for sui generis.
Charles Brecque: And I know that each council has its own HMO licensing requirements. Obviously, there's the mandatory licensing, but there's also selective or special, depending on the council. Are they also open then, in terms of, you mentioned around planning permissions for six bedroom, HMOs did they indicate anywhere that they're not open to these? Or is this something that you had to find out the hard way?
Radhika Shah: So that was just for more than six bedrooms because you have to go through planning permission regardless if it's more than six, sorry, more than six people living in the house. And we were planning for seven, eight bedrooms. One of the properties was nine bedrooms.
Radhika Shah: So it really depends. And this is why it's so important to work with people in the council or work with other property investors who have invested in the area and have the knowledge and expertise if you don't have it. And especially if you're starting out. But it's super, super important that you're following what each council are saying regarding that, because they have to sign off, they have to come in, view the property. They need to make sure everything is up to scratch basically. And there is a check list online per council that you can go in and basically use that as a tick box exercise as well. But just working with building regulations and builders who are knowledgeable in HMOs within specific areas of the area.
Charles Brecque: I see, so quite a maze to navigate.
Radhika Shah: If you get it wrong, it's a costly exercise, if you get it wrong. So super important that you're putting the time and effort to learn about specific areas before you go into HMOs.
Charles Brecque: That's useful insight. So where have you invested in?
Radhika Shah: So a bit all over the place. So, we've got a couple in Burnley, we've got one in Peterborough and we just bought a Buy to Let in Newcastle, so little bit everywhere.
Charles Brecque: Great. And so how do you manage those locations? Cause you're currently based in London.
Radhika Shah: Yes. I'm based in London. So when I had my first property it was a cheap investment. And I don't mean cheap investment but the entry costs was so low that it made it so much more affordable and everything just made sense essentially. I had a 20,000 pound council loan to refurbish that. But when we set up the business, we wanted to employ specific people who were specialists in those areas. And that includes property sourcers, lettings agencies, refurb teams. And if we can find one specific person who has the expertise and all of that, who can essentially manage everything. Then that is what we're looking for. We're not looking for specific areas. We're not looking for specific roads or postcodes or anything like that, if it makes sense on paper and that it provides a hands-off kind of experience for us then we're happy to have a conversation with people.
Radhika Shah: But I'm a tough cookie sometimes. And yes, I love working with other people, but there's so many people I've had conversations, I'm like, I don't think there's a fit here, but then there are specific people where I'm like, okay, let's take a bit of a risk on this.
Charles Brecque: Yeah. I think, especially if you are so far away, it's important that there is a good fit and relationship with someone on the ground.
Radhika Shah: 100%, yeah.
Charles Brecque: So you've been at this now for three and a half years. What's the plan for the next 3, 5, 10 years?
Radhika Shah: To be honest, it's forever changing and. I think if you asked me six months ago, I would have said something completely different. If you ask me in six months time, I would've said something completely different.
Radhika Shah: So our plan is just to grow our portfolio slowly. We are all still working full time and I love my job, even if it does get hard sometimes, but I do love my job and I love what I do, and I love my team and everything. So for me, like it's growing our portfolio slowly as we're building up our property portfolio, it is getting a little bit harder to manage everything.
Radhika Shah: Buying new properties, the refurb, the tenancy agreements, specially within HMOs there's such a high turnover of tenants. You've just got to be careful. And then sometimes, like yesterday, the electricity in one of my houses just decided to turn off. So trying to get through to our energy provider and it took me like two hours. I asked my lettings agency to call them and she got through within five minutes. So there's so much behind the scenes that people don't see. And then once they start building up that portfolio, they still have to understand you've got to manage everything. You've got to oversee it. You can't just keep buying properties because so many problems unexpected that you've got to make sure you've got processes to understand that you can manage it before you start buying loads of other properties.
Charles Brecque: So I guess it's growing patiently.
Charles Brecque: Great. And so you mentioned HMOs, Buy to Lets. What are the key contracts that you interact with the most?
Radhika Shah: So the first one is because we do work with sourcers, we've got to make sure that we read through every single term and point in their contract to say, this is what the relationship is going to be, this is what they need from us. But more importantly, this is what they're going to provide for us. And here's the outlines, et cetera of everything.
So one thing that we do. Obviously the heads of terms, which can be quite flexible of how much we're going to into it and how much they're going to put into it, what their responsibilities are when certain things are going to get done. With the legal aspect of exchange and completion those are some things that we can't really control because we don't know when those specific dates can happen. But everything else in terms of the refurb, when they're going to send us pictures, when they're going to communicate with us, getting schedules of work. Everything is in that first contract.
The second contract is with our lettings agency to make sure exactly the same, the heads of terms- this is exactly when they're going to provide, they're going to keep me updated, weekly meetings. And everything is stated on the contract, because if anything does go wrong, then I can say hang on, you signed a contract to say ' this is the level of service that you're going to provide'. Which is super key you get that upfront rather than problems occurring later down the line and you haven't signed a contract to say what's that grey area.
Charles Brecque: Yeah. I think I'm being clear up front is critical in everything in life almost.
And so with those heads of terms, especially with property sourcers or letting agents, are there any key objections or key areas that you find negotiating?
Radhika Shah: So sometimes it could be with the payment upfront, especially for working with someone new. I think most of the clauses that some property sourcers do put is there's a non-refundable fee. And that's something that I genuinely don't ever pay unless I've met that person, I'm super, super happy.
So the first time I worked with a property sourcer, I negotiate that has to be refundable. Because if I don't like the property,I don't like you, i'm not going to work with you. But I'm also not going to travel waste my time, traveling up there as well, because that's already my commitment. I'm already traveling, paying, taking the time out of my day to go and visit you so surely that's some sort of commitment. But if I don't like the property, I'm not going to pay X amount in. And it's not a cheap investment to make, especially when you're speaking to other property sourcers I don't want to waste anyone's time, but I need to make sure that this is a right investment for us as well, because you can pay a thousand pounds here, 1500 pounds here and there but then slowly that's going to add up to a deposit, which we can't really afford anyway. And no one can afford to lose that money. So that's one thing that we tried to negotiate.
Secondly, with the letting agency side, it's so difficult because we're so far away and I don't want to be getting a call in the middle of the night to say: 'Hey this is what's happened.' So we just want to make sure everything is put into place and we have contingencies to put in place. So if anything, after 5:00 PM happens, they have the say-so, unless it's a big emergency that they need to contact us for that. But we do like to be kept in the loop.
The other one is rent collection. I was getting like three invoices per week per tenant and it was a bit annoying. Cause when I was submitting my taxes and it was just all over the place and I couldn't track of payments. So I changed in terms of contracts just to be paid out on the last day of the month or the first day of the month, depending on when they pay. So everything is just concise and I don't want to be wasting my time reading several different invoices and payments slips and things like that.
And I guess the other one is like small refurbs as well. In one of my properties, so the one that I, and I think. I don't quote me on this, cause I don't know what the exact amount is, but I think anything under 50 pounds they can just go and spend it if it's tap or something little needs to be fixed and stuff like that, they don't need to contact me about that.
Anything over 50 pounds then they have to have my say so before they start replacing things. Yeah, just trying to like filter and process a lot of things where it's easy for everyone that they don't have to keep contacting me, essentially, because that's the last thing I want. That's why employee lettings agency cause I don't want to be bombarded with little things like that.
Charles Brecque: Of course. We work with lettings agents and one thing that creates discussion at the beginning is always the spending caps. But I think when landlords understand why they exist, they appreciate that it's also to save them from being bothered at random hours. Useful insights.
I'm conscious that we've already taken a lot of your time. So I'm going to ask you the closing question we ask all our guests. If you're being sent a contract to sign today, what would impress you?
Radhika Shah: What would impress me? Do you know what I hate reading things, as in like long documents. I'm just not one of these people who do it.
My business. partners just sort that. I'm like here, we've got a contract can you please read it and figure it out? Because I didn't understand half of it or I asked someone specific where I can ask my solicitor or anything like that, and I would get them to do it just because I just can't do it. If you can get a contract into one page and bullet point everything, just so it's basically an idiot's guide that's what impresses me. And people have done that. They've bulleted. Obviously like sometimes you can't put contracts into one page because there's so many other things and T&Cs and stuff like that. But the main heads of terms, just keep it clear and concise. It doesn't need to be filtered with a thousand nice words So that's just that for me, that stands out. You've got to make it idiot proof unless it needs to go to a solicitor.
Charles Brecque: That's a very good answer. And something that at Legislate we're definitely trying to do, both with the questions and answers, simple language for the contracts. But we're also in the process of introducing a visual representation of contracts, which is something which doesn't exist in the market and hopefully will engage people. Because one thing we do notice across our user base is not everyone reads their contracts and that is a pity.
Radhika Shah: The other thing is if there is a system, which I think you guys do as well, when I've spoken to you before, is if I'm trying to say something , I'm not the best at English - I didn't get an A* in GCSE and I definitely didn't take it further. But a lot of people sit not at the A* grade in terms of English, especially when you leave school and things like that. Writing down sentences, but then there's a way to simplify it, but putting it into a legal contract with all the fancy words in it.
Charles Brecque: Yeah. We definitely take care of the whole process of writing for everyone.
Radhika Shah: Exactly. Yeah. Without having to pay thousands for a lawyer.
Charles Brecque: Exactly. Exactly. Great. Thank you very much Radhika for being on the show and best of luck growing your portfolio. And hopefully we can have you on again.
Radhika Shah: Yeah, perfect. Thanks so much for having me.
Charles Brecque: Thank you.