With no money, Martin and Magdalena set up shop in their living room at Western Beach Apartments. Barely able to pay the mortgage and with visits from the bailiffs for unpaid debts, they still quickly built up to a team of eight people working for them, many unpaid interns. There were desks and filing cabinets sprawled across their living room. In the first two years, they set about refurbishing the remnants of Martin’s portfolio and renewing tenancies. Martin was responsible for lettings and Magdalena took charge of construction, interior design and accounts.
To raise start-up capital, the couple offered tenants discounted rent in exchange for advance payment. Desperate to make ends meet, they would often work 18-hour days every day – and they often brought their son Jack, still a baby, with them onsite as they couldn’t afford child care. One property, 28 Argosy House, became their ‘lucky charm’ – the tenant agreed to pay a year’s rent upfront which helped Martin and Magdalena to return to the property auctions.
The couple purchased more than 30 properties between 2011 and 2013. With very little money for a deposit, they were forced to buy properties with expensive bridging loans. Just as they had done previously, they refurbished the properties and added bedrooms. This increased their value enabling them to refinance on much improved terms. And with property prices in London recovering, they were able to release equity to fund their next purchases.
A change of strategy
This time around the couple’s strategy included selling properties once the value had been maximised. Achieving a much higher price per square foot for their micro-apartments encouraged them to pursue a build-to-sell strategy. Approaching the market from the position of a consumer, the couple focused on building homes that were in reach of the average Londoner, estimating that around £800 per month was how much people could realistically afford to spend on mortgage payments, bills and maintaining their apartments.
To be continued…