INVESTOR FOCUS: Stephen Kempt

North West investor Stephen got into property to fund a modest retirement, now the goals are much bigger and, well, furrier!

OTH: Hi Stephen, thanks for taking your time to talk to ON THE HOUSE Magazine. We’ve seen some pretty stylish pics of your most recent renovation – and it looks like you have a solid process which involves working with investors. But how did it all start?

SK: Like many people we always felt as though property was a good idea, only as far as to say that our ambition originally was to own our own home plus one rental property, with the idea being that the rental could one day be sold to fund retirement. But then you get into that position only to realise that it’s actual work having rental property. It’s not like owning your own unlimited ATM like some may allude, but also that when you do the real maths, selling one property in order to fund the golden years will almost certainly leave them less than golden. We are in the North West after all, and the reason investors typically come to the North is yield, not capital growth.

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After getting into what was once a dream position of owning our own home in 2013 followed by a rental in 2016, things kind of stalled for a while. After all, we thought we’d ‘made it’! My partner Natty worked her day job as a civil servant, and myself operating my own barber shop. We enjoyed life and holidays, perhaps a little too much, as we were accumulating bad debt along the way.

January 2018 would be a fresh start for us, well after investing several thousands of pounds surfing around some property training providers, many of which lured you in with the temptation of striking overnight gold. But that’s another story entirely! One thing that kissing frogs did teach us, was some fundamentals and tools for property. In particular Buy, Refurbish, Refinance, or BRR as its commonly known. This was the secret sauce for us, as not only would it allow us to clear our existing ‘Doo Dad’s’ (See Robert Kiyosaki’s ‘Rich Dad Poor Dad’ book for the reference) but it would also form our property blueprint. After meticulously studying the property market and its trends, while in the background reducing bad debt to zero, there was now only one challenge, we had the theoretical knowledge, sprinkled with some practical, only we were still at zero, nada, nothing in the bank. But that’s where the second gem from the course selling pied pipers came in. ‘OPM’, or other people’s money. We could fund our property projects using other people’s money by offering them a fixed return on their savings, while we did all the work. After all, we were known to be trustworthy, hardworking people with good standing in our community. All transferable skills, topped off with our research of property investment market and some experience from our first rental property. Now all we needed to do was find some deals!

One of Stephen and Natalie's BRRR projects

OTH: Did you settle on one strategy early on, or was it a process of trial and error?

SK: Buy Refurb Refinance utilising Other People’s Money (OPM) - buy-to-lets in and around Bolton. That was our model and we were sticking to it. If you’d have asked us at the time ‘Why that strategy?’ we’d have said, ‘because we intend to start small, doing what we have already done before to mitigate risk’. Whereas in reality, yes we definitely do always err on the side of caution (especially when putting to work other people’s hard-earned cash) but also, anything BIGGER than a two-up, two-down mid-terraced that had stood for over 100 years simply scared us, succumbing to that little voice in our heads that said ‘you’re not good enough, or smart enough to do something like an HMO (House of multiple occupation) or CC (Commercial conversion)’. A voice that I’m sure we can all relate to, and frankly a voice that most of the time should simply be ignored, or used as a signpost to the exact opposite!

OTH: If your social media feeds are anything to go by, you are very much part of duo with your partner Natalie. How has that partnership evolved when it comes to property and would you have any advice for people who want to mix business and pleasure when it comes to bricks and mortar?

SK: Although the two of us are very much life and business partners, clearly defined rolls in business are essential to ensure success, as in the early years we both tried executing similar tasks, which not only caused some minor frictions, but it also slowed things down. Fortunately, seeking to adapt, this encouraged us to consider our own personal skillsets and whose talents would be best used where, with us opting for me to take on the primary front end and driving seat in the business (...that we called Grey Fern Properties after my late step father Graham Fern), while Natty took on more supporting roles, not to mention more immediately picking up the slack for lost revenue so that I could commit to business more or less full time.

Aside from the role allocation, couples also need to consider that the kitchen table is not the best place to conduct business. The simple reason is because it has a habit of blurring the lines between work and play. We’ve had countless 18-hour days as a result, that on one hand was good for business, but on the other at times left us looking like zombies and wondering what we used to do before property?! I believe there was a programme called ‘Love Island’, on that square teleprompter looking thing that was gathering dust in the corner of the room. Jokes aside, downtime as a couple and a date night should not stop, otherwise ask yourself why did you join the entrepreneurial ranks in the first place? #Freedom springs to mind!

The hustle is real for this duo

OTH: What are your medium and stretch goals and do they seem more achievable today than you ever imagined prior to property?

SK: As two council estate kids growing up on benefits this is something we never expected to be saying, let alone be within reach. Deep breath… In the short term we aim to get Natty out of her job, and essentially retired. And to think she is 32 now and that’s the plan blows my mind alone, but then onto the stretch goals and the reason we truly work as we do. Natty wants an animal rescue shelter, and with it having a likely overhead of 25-30k per month given the amount of animals she intends to rescue, we aim to fund it through cashflow from a growing portfolio. So more single lets and HMOs, but also moving onto bigger projects like new builds, blocks of flats, or commercial conversions the first of which we have just had an offer accepted on, so keep an eye out for that one.

Natalie's investing 'why' - owning an animal shelter

OTH: What has been the most effective techniques learned or things you have done to help you achieve your goals?

SK: Absolutely no hesitation and Guerrilla marketing without doubt, working with a mentor and coach. Think about it like this, why make all the mistakes yourself when you can learn vicariously from someone who has been there and done that, walked the walk, and got the t-shirt twice over. Not only that but you get accountability and support along the way. It’s actually something we firmly believe in in life, ‘each one teaches one’ as we believe we were given two hands for a reason, one to help ourselves and one to help others. Obviously, high-level coaching comes at a cost, but our coach Susan Alexander/The Property Mentor is worth every penny and more, and at times, we do wonder what our property journey would have been like without her.

Guerrilla marketing and inspiring the next gen investors

OTH: Climbing interest rates, a cost-of-living crisis, government meddling - What advice would you have for someone who is a couple of years behind you and looking at the current market and thinking it looks too hard to get into?

SK: It is hard, it’s that simple! There’s a reason that people choose to invest in our projects for a truly passive return. Property is tough at the best of times, and gone are the days where you can be a hobby landlord or investor, and increased regulation is exacerbating this further. That said, if you are serious about getting into property, know that it isn’t impossible, just be aware that we are in an ever-changing landscape that will require you to be equally adaptable.

OTH: One of things you are known for is documenting the highs and the lows of being a property investor with your ‘F-Up #Friday’ series – what dose of realism would you like to offer up to those who have dream of a life of passive property income and sunning it up on a beach all day long?

SK: If that’s what you’re after you’d better find a way of duplicating yourself first of all as one of the myths of property is that it is ‘passive’. Our experience is that it is in fact far from it (unless you’re investing in other people’s projects), or certainly in the growth phase it won’t be, and even then, I’m not sure it ever will be. It may be semantics, but we prefer the term residual. Income certainly reoccurs, and once you have done the work it does get easier over time as the heavy lifting is done upfront, but passive, if that’s what you’re looking for perhaps starting a property business isn’t for you.

OTH: What are your funniest posts that have really resonated with people?

SK: It was a while ago but this still makes us laugh. We actually had the wrong phone number printed on one of our cars when it was first stickered up for advertising, and we didn’t notice, someone else had to tell us, and even then looking at it we couldn’t see the error!

When you see it!!

OTH: Thanks so much for your time Stephen - where can people best follow you and get in touch?

SK: Although we are on all platforms as Grey Fern Properties, we believe in human connection and not hiding behind businesses logos, so feel free to add me on Facebook, simply search Stephen Kempt, then don’t be afraid to drop us a DM!

Cheers to a welcoming and well-staged home