Wow! What a difference a month makes.  The world is now a very different place since I last wrote this update.  I hope everyone and their families are safe and well.  The World has been brought back to working on a very human level fighting the Coronavirus. The world has been forced to work together against a common threat and the best elements of human nature are rising to the surface.  On a personal and family level everyone has to adjust and survive both with his or her health and finances in place.  

Personal finances and business finances are intrinsically linked and should always be treated as such.  We are in unprecedented times and things are changing all the time but in crisis times businesses can do one of three things and it is important to be strategic about what you do.  

Option 1 Close up and hibernate through the period, shut down all costs and survive.  This is what a lot of the high street shops, and restaurants have done.

Option 2 Get through the difficult period and maintain as much functionality as possible to enable you to flourish at the other end in the new environment

Option 3 Change strategies and move completely into a new and different business; there are plenty of examples of this with businesses moving online or manufacturing different items to sell.

Saltbox Living Ltd strategically sits in a few of these options as we cover a large area of property investing.  The broad range of property investments has always been a strategic move; Saltbox invests in single lets, high yielding strategies such as HMO’s and Serviced Accommodation, commercial properties and developments.  The diversity should give us the strength to get through this period of uncertainty.

It has been a few turbulent weeks and a period where we have had to move fast and adapt quickly.  First of all the holiday lets and serviced accommodation section was hit hard and fast.  We received a large number of cancellations and decided to follow government guidelines and close all of them down.  This part of the business has gone into hibernation and costs have been reduced.  There could very well be a bounce back in UK after the lockdown has been lifted and nervousness surrounding foreign travel continues.

The HMO side of the business however has been different.  We are strategically working on option 2.  We have also had tenants coming into difficulty and we are working with these tenants to help them through this period with payment plans and support.  We worked with locked down houses purchasing outdoor garden furniture and supporting their needs to make it a little bit more bearable.  Small gestures like this go a long way to maintain a good landlord, tenant relationship. 

We were actually extremely busy in the period leading up to lockdown with people downsizing from single let flats to shared accommodation and also some people moving out of family homes away from elderly parents ready for the lockdown.  

In terms of life at the other side of lockdown, I believe the HMO strategy is still a strong strategy as it offers good quality cheaper accommodation and this is still going to be in demand and maybe, even more so now.  Obviously the right properties in the right areas designed and built to fit the market it serves in vital in this.

In terms of opportunities in purchasing and investing in property then this is going to be a period where there are going to be a lot of opportunities. Financial pressures will bring properties to the market and anyone in a position with funds and ideally cash funds can take these opportunities going forward.  We are already focussed on this and are looking to invest heavily in the next few years.  This is going to be a real opportunity to make long-term deals pay off.  Our HMO sourcing and development sections of the business are strategically being positioned to be very active.

Sorry for the slightly longer introduction but I thought it needed a little more explanation in the situation we have at the moment.  Now for a little update on our on-going projects.

PROJECT UPDATE

6/7 bed HMO in Darlington

This property is now fully let.  We managed to get 4 rooms let before the lock down and prior to the lockdown I added to our marketing photographs and made a video of the internals of the house which shows all the bedrooms.  We have now been able to use this along with the photos and pick up the remaining two tenants through the media of Skype and videos.  This highlights the importance of being systemised in your business. Long before Corona virus arrived we systemised our tenant take on system to enable it all to be done through online.  The system took a long time to perfect and get right but it has allowed us to legally take on tenants through the use of Signable and scanning software’s.  The only face-to-face meeting was the viewing, which has now been superseded with the property marketing video’s and the Skype call.  We will however have to wait until after lockdown to move the final two tenants in.

6 bed HMO in Ripon

The development is now just about complete with only the externals and a little bit of snagging to do.  The lockdown has affected the final actions with some of the materials needed being unavailable.  I have however planned ahead and took some pictures and videos before the lockdown and I am using these to market the property, using these as virtual viewing material and going through the rigorous referencing process we have designed.  At the point of writing this we are going through the referencing process with potential tenants on three out of the six rooms.  In terms of the property I think this is my favourite yet.  It is an usual house being narrow and tall which has brought its challenges in terms of design and fire regulations.  We have utilised the loft space, which has created a fabulous upper floor room with ensuite.  The challenge of this is that the four stories bring in the need to implement additional engineered fire solutions.  In this case we have installed an AOV (automated opening vent) located at the top of the stairs. This opens when the fire alarm is set off and is designed to keep the stairway smoke free so exit out of the building is protected.

6 bedroomed HMO in Barnsley

Rip out and building work has commenced on this project.  The materials needed were obtained before the lockdown so construction work can be continued.  A Corona policy has been written and is being followed. 

6 bedroomed HMO in Barnsley

This property and the program have been affected by the current situation.  The schedule of works have been written and quotes are being put together but this process needs site visits which just can not happen at the moment so this project has been closed down until the restrictions have been lifted.

Things are changing on a week-by-week basis at the moment but it is very important to be strategic in times like this.  Some parts of our business have gone into hibernation like our SA business and developments and some parts are working.  The world is now a different place and the property market is going to be affected.  My view on this is that house prices will come under pressure as well as the economy.  Banks have pulled products and some have left the market altogether.  However, the drop in house prices brings with it excellent opportunities to invest.  Opportunities will increase and anyone with cash available to purchase will be in a very strong position.  At the moment this is not the focus and getting through this period is the only thing that is important. I have my elderly parents and my immediate family locked down but I am preparing my business, investors and myself for a strong period of acquisition in the latter part of the year. 

Keep safe and see you next month.