Legislate meets Sarah from Alt Street Property

Building more than a property portfolio

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In this episode, Legislate meets Sarah from Alt Street Property, a property investment and development company which provides tired, unloved houses and turns them into modern accommodation for young families. Sarah talks about investment strategy and how Alt Street Property is building more than an investment portfolio but a community for its tenants. Sarah also mentions the importance of explanations of contractual terms and clauses in speeding up the contracting process.

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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 Sarah from Alt Street Property on the show. Alt Street Property group is a property investment and development company, which provides tired, unloved houses and turns them into modern accommodation for young families, as a long-term solution.

Sarah, welcome to the show. Would you like to introduce yourself and your company?

What's the story behind Alt Street Property?

Sarah: So thanks for having me on board Charles. Lovely to be here on the podcast. I am Sarah Watts I have, or am, running Alt Street Property with my husband, and have been a property investor for over a decade. We started in Australia, which is where we're from, you could probably tell her the accent isn't as British as you'd probably find. So we started in Oz and we came to the UK in 2016 and that's where we established Alt Street Property, and really took it more of a business slant to what we do now.

So before then we were always single let landlords. Always done it on the side of our day jobs. So I'm an accountant by trade and my husband is in a, big four lift company, is the director there. And so property for us was always something we did on the side . It wasn't until we came here, and I went on my first round of mat leave, that we actually started to take it more seriously and build a business and brand and all that kind of stuff.

And it's a constantly evolving piece. But then we've gone from single let landlord a couple of flips here and there when we were working in Melbourne Australia. And then we came over here and really started to branch out into co-living HMO's, which is what we have at the moment. So we're just about to finish our fourth co-living HMO, all in the same area. And that's where our direction is heading at the moment.

Charles Brecque: Very exciting. And so if I may, why did you make that big move to the UK? Was it for property?

Sarah: And it was the day jobs at the time. So I was the reason why we came over, but the reason why we stayed is for Andrew's job. So it was literally because work brought us here and we decided. Everywhere we went: we've worked in Sydney, Melbourne and now based in Milton Keynes of the UK, we've always done property on the side of wherever we were in the world. So we've sold up our Melbourne portfolio. We weren't going to, we didn't have any family back there. We didn't have any ties to Melbourne. So we sold up, so effectively flipped the property portfolio we had there, and then came to the UK and started from scratch. So when we first started, I didn't know anything about chains. I didn't know anything about, how the legal process works. I just assumed it was the same. And, my gosh, that was so not the case. So when we first started buying, we thought it'd be really straightforward and it's not. And I had to reeducate, or we had to reeducate ourselves as to what chains were, and all that kind of stuff. Cause it's just not the same.

I guess legislation wise, Australia is very much or very similar to Scotland and the rules associated with that. If you sign that's it, there is no going back and there is no a lot of falling out of bed and all that kind of stuff. That's the kind of things that we needed to reeducate ourselves with I guess when we came.

Charles Brecque: What are the key differences or similarities between running a portfolio of properties in Australia and in the UK?

Sarah: We've only very recently started to self-manage. Before that we always used an agent and that was purely because we just didn't not have the time to manage, on the side of our day jobs.

 Oz self-management is not really all that big. Most of the time you give it to an agent, that's just the given thing to do. Our Australian portfolio that we still have in Sydney, is very much still with the same agent that we've had from day one. She's absolutely brilliant. And we can actually do refurbs from the other side of the world because of that relationship that we have.

 I think in the UK, we started off with a high street agent because that's the only thing we knew at the time is just give it to an agent and be dealt with it and have that arm's length transaction between you and the tenant.

It's only recently that we've started to reeducate ourselves in the landlord or the landlording sector in order for us to have the confidence to pull it off, but also have the time to pull it off. There's a lot of legislation involved and a lot of, changes that are happening.

And if you're not kept abreast of that, it's very easy for you to be caught out. There's so much paperwork you need to serve to tenants these days. And I think I was very nervous if I didn't do the right thing, I could be caught out. And, that's why we started off with an agent and it's only, it's taken us probably about five years to actually get to the point where we're confident enough to self-manage ourselves now.

What's been your favourite moment so far?

Charles Brecque: That makes a lot of sense. And that's one thing that at Legislate we see is, governments will provide guidance and, new templates, but they're often contradictions or things aren't very clear. Especially if you haven't done it in practice for a long time, it can be difficult to know or to be a hundred percent sure.

So I guess also my next question is what's been your favorite moment so far?

Sarah: Property wise, I guess it's actually our recent co-living events that were started to put on. So this is actually quite new for us. We've got to the point where our portfolio is now big enough to get those economies of scale. I think when you just got one HMO, it's just really hard to keep that cohesive approach. Whereas now we've got 16 about to launch another five, so that's 21 of them. And so the best part of the job is actually seeing them all come together and you think, oh why would you want to throw all your tenants together? And it's, it doesn't really make any sense why you would do that. For me, At some point, it just goes beyond the money and I'm not a social landlord. I'm not, I'm not taking care of, disabled tenants or anything like that. It's more what I'm trying to create as a community. And that's what I want to create with my tenants.

And it really helps that they can all walk to each other's houses. But what I want is to create that co-living environment, where you're not just moving into a house with four magnolia walls, that was, it's dead, this is what you used to do in the 1990s type thing.

What I'm trying to do is really create that community feel. And by putting on the events that we do, we had an end of summer barbecue. We're about to have our Christmas party in a couple of weeks, and really creating and fostering that kind of environment to the point where I don't really get many voids because, tenants don't really leave me that often.

So that's probably the best part of what I do. It goes beyond, it's not just about profit for me. It's about knowing that my tenants are safe, that they're happy that they have a combination and we're raising the standards across the board to know that this is the new standard of accommodation that people expect these days.

And I think that's the most rewarding thing I get out of landlording.

Charles Brecque: Quite a novel approach, I think. Does that mean that you also target your properties so that they are close to each other?

Sarah: At this stage, yes. Only because the opportunities have just come our way. And so , it's very helpful. I don't think you necessarily need to have them close together in order to do what we do. You can have them scattered around. It doesn't really matter. But for us, it's just about how they communicate with each other. And how they create that community feel. So it's definitely helpful, I think, but it's also one of those things.

If you have too many in the same area, that's also not a good thing so from a diversification or investing point of view, we would want to look a little bit outside that so that we're not all concentrated in the same area and we don't have too many eggs in one basket really.

What do you wish you'd known before getting into property?

Charles Brecque: Of course. And what would you wish you'd known before getting into property?

Sarah: I think the biggest hurdle I had to overcome was my issue with debt. I guess when I was raised, very typically middle-class, debt is bad. Pay off your mortgage as soon as possible, credit cards are bad. Every, every lot of debt is bad. And it wasn't until I read 'Rich Dad, Poor Dad' at the age of 23 that it made me want to throw all my accounting textbooks out of the window, because it was just completely irrelevant. And I think the attitudes towards debt or the classification of debt either good or bad, it can be used to leverage and it can be used to actually spiral you down into, all sorts of bad things.

 But , the way you use debt, I think is the biggest thing I wish I had learnt earlier on. And how you can, how leverage is so important and how the rich actually use debt to their advantage. I think that's probably the biggest mindset shift I've had. And then ever since then, it's where can I get more? So that's what I wish I had known a little bit earlier, obviously, I went through uni. I went through the whole university type thing did my post-grad all that kind of stuff. They don't teach you any of this in school. They didn't teach me any of this in university. And so that, I think I wish I had known, or probably even got to the, self-education part with books and things a lot earlier than what I had done. So I wish I had exposure to that earlier on.

Charles Brecque: So does that mean you follow a Buy, Refurbish, Rent, Refinance type strategy with your properties?

Sarah: Yeah, we always try and hold. We very rarely sold the only time we did sell was from Melbourne. And that was for personal circumstance, but also because it was the right time to sell at the time- the market was at an all time high.

And we wanted to do a flip. So that was the only reason why we did actually sell. Everything else we've held from day one. So my first property, Andrew's first property, we've held since 2008, since 2011 and just kept it and just watch that absolutely, skyrocket early , or at least it does in Sydney anyway. Sydney is a very capital growth market.

Definitely try to refinance where we can, but now I think our attention is more so on our UK portfolio and doing the same. So we don't intend to sell, we just intend to accumulate, unless something drastically went wrong that we had to that's the only reason why we would otherwise the way I see property it's, I wouldn't say for life, but for a very long time and something I want to pass down to my children. And at the same time, if you can have an income from that on the side, that's the bonus, but for me, I'm a long-term hold type of person. And then using refinancing to make sure that you can continue to grow as well.

What's your vision for the next 10 years?

Charles Brecque: That makes sense. So I guess what's the vision for altering property for the next 10 years?

Sarah: Oh, the reason why I say that is because if you had told me I would be in the UK five years ago, I would have laughed at you. So I've got no idea what 10 years is gonna look like.

I would love to say another 10 properties, or, I'd quite like another, maybe three mill worth of property, something like that. I would love to do developments later down the track, I think, and just continue to grow. So if we continue at the same trajectory as where we're on, we normally do about one project to two projects a year. I'd love to do that, but faster. So either when I've been faster, it's either, small blocks of flats. Or small development, things like that. That's the next stage for us in what we're doing. I also do love HMO's, I've grown to love HMO's- didn't even know what one was in 2019. So there you go.

 Just goes to show how much you can evolve over time, but I think that's probably where we want to look to is bigger, better, faster on what we've already got. We've already got that knowledge, but it's now it's about applying that and seeing how we can do that. Yeah, bigger, better, faster in the next 10 years to hopefully get us to where we want to be.

What are the key contracts you interact with the most?

Charles Brecque: That's very exciting and best of luck in the execution. So you've now got a fairly big portfolio and also in two different places quite far from each other. What are the key contracts that you interact with the most frequently?

Sarah: I would probably say now that we self-manage, it's got to be ASTs. And that's just because we have the HMO portfolio. I wouldn't say they turn over all the time, but because we've got so many tenants, it's the one contract we would use regularly. ASTs, checking ASTs, making sure that we really refined the special clauses we put in the ASTs and it's also the changes of legislation. So it's happening all the time.

As much as you say, they can't throw anything else at landlords. Oh my God. Yes, they can. And making sure that your clauses get you out of a pickle if ever you were in one. So that's probably the contracts I use most of the time.

Other than that, it's just whenever we buy. So it's your normal standard conveyancing stuff that all goes through that's solicitor speak so to be honest, I don't really know much about that. They just go sign here. Okay. So they're the main two when we buy. But from an everyday kind of perspective, it's got to be the ASTs that we have with our tenants.

Charles Brecque: And with your ASTs, are there any common objections or key questions which keep coming up from tenants?

Sarah: That's a good one. We do have special clauses in ours. We have a couple of single lets - UK portfolio- and they are pet-friendly. So sometimes it's about the pets, the pet deposit that's now changed because of legislation, making sure that they're aware that when they want to move their cat in that they have, they sign an addendum saying, yes, I will repair any damage that there is. And, the landlord is not going to be held responsible for the welfare of my pet and all the kind of clauses that you think are no-brainers I put in my contracts. I'm all for pets, I have a dog of my own. But I don't want to be held responsible if something happened to the pet or the pet died and then all of a sudden, oh, 'I'm going to Sue my landlord or anything like that'. So it's making sure that your backside is covered. I think that's more from the single let side.

 From the co-living and HMO side, it's more about future-proofing yourself against potential council tax banding. Are all my bills included is a very common question that we have. Hopefully so far fingers crossed we don't. But you never know it is coming. And that's the next big thing in the HMO space, I think is that council tax spending, because it's so sporadic at the moment.

The other kind of clauses that we have -I guess that's the main one. I put all the normal other things, like what is included. And we also make sure that we have a very stringent set of house rules that is also attached to the AST- make sure you read them because the list is three pages long now. There's so many things that have happened to us. We started off very like very simple kind of thing. We thought let's not complicate this. I like to keep things simple. And as things have happened to us over the last two years that we've been in the HMO co-living space. We've had to put more and more things in as we get questions asked, especially around guest policies things like that- can invite my friend over. And I'm like, there's friends and then they're staying for more than three days a week. So things like that, that I think we've had to adapt over time. So making sure that our contracts are up to date is a hundred percent key for us.

If you were being sent a contract to sign today, what would impress you?

Charles Brecque: That's quite interesting. And I think one thing in properties is landlords if they're concerned it's more about the damage to the property, as opposed to what you mentioned around the welfare of the animals. I thought that was quite a interesting angle. And obviously from an ethical perspective, much better.

So I'm conscious that I've already taken a lot of your time. So I'm going to ask you our closing question, which we ask all our guests. So if you being sent a contract to sign today, what would impress you?

Sarah: I think before any contract is drafted, you need to have that conversation as to what on earth am I signing? What I would like is yes, there's lots of legal speak and yes, there's lots of legal language. What I want to see is that in layman's terms, what does that actually mean for me?

And knowing that all the questions - I have a lot of questions- but all the questions that I have is laid out in a separate document that says, this means this and that, and that's what you're signing. I kind of skim read. I don't read every single last dot, cross your eyes start teasing it in a 64 page document. But what I would like is, these are my main concerns, these are the questions I have. Have you addressed it in the legal speak that you have if you have, and I can see it and it makes sense to me, then I will sign the document.

So for me, it's laying it out in clear, simple language is really key for me. So if it's something I don't understand, I will go back and ask and it'll just delay the whole process.

To make it really nice and easy. Make sure there's a Q and a type document that goes alongside it, or make sure it's really clear if this happens and that this is the outcome. I think it's really key. And not many lawyers can do it really well. I think they very often get so tied up in all sorts of various language that you think, I don't really understand what this means and I have to go back and ask for a phone call to break that down. So I think, yeah, keeping it simple is the best bit.

Charles Brecque: Yeah that's great piece of advice and, not to plug legislate, but that's one thing that we try to do is on the one hand, simplify the language that there's no legalese and that everything is easy to understand, and the classical contract view. But we also offer a Q and A view of the same contract so that people who aren't familiar with contracts can still understand the key terms.

And we're also working on a new visual representation of contracts to also quickly surface the key and rights and obligations of both the landlord and the tenant so that everyone understands the key terms without needing to speak to a lawyer

Thank you very much, Sarah, for being on the show. Very interesting conversation and best of luck growing your business over the next 10 years. I'm sure you'll succeed. Yeah, best of luck.

Sarah: Thank you so much for having me, Charles.

Charles Brecque: Thank you, Sarah.


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