19th October 2006
City AM – Building a Buy-to-let Empire
After setting up his buy-to-let firm Imagine just three years ago, Grant Bovey is already on course for a billion pound company. Claire Oldfield meets him
It's hard to believe that a £1bn property empire is in the making in Farnborough. The Hampshire town is better known as the home of the International Airshow. But this is also the headquarters of Imagine homes, arguably Britain's biggest buy-to-let firm, and the company headed by Grant Bovey.
Farnborough suits Bovey. He arrives for our meeting at the Norman Foster designed offices on the edge of the airfield, after the 10-minute trip by helicopter from the home in Dunsfold, Surrey that he shares with his wife, television presenter Anthea Turner.
He delivers an impressive opening line as the remote controlled blinds lift in his office to show the full glory of the airport. "That one's mine," he says, pointing to a blue helicopter. You could be forgiven for thinking this is a little flash. But Bovey is a dedicated pilot, who has been flying for 17 years.
It makes sense for his office to be so close to the airport; it means he can fly from Farnborough to Battersea, so he can get to meetings in central London, and he can also fly round the country looking at sites and properties that make up the Imagine Homes empire.
Imagine Homes owns properties throughout Britain, from Kew, Wapping and Canary Wharf in London, to Newquay and Manchester. When he bought 72 flats in Bristol, the £10m deal was hailed as the biggest-ever single property sale in the city.
A NEWCOMER TO THE BUSINESS
And as quickly as Imagine snaps them up, they are furnished and then sold to buy-to-let investors. It is a smart policy given the appetite for property investment, which has increased as people seek an alternative for putting their money in a pension fund.
Bovey has been involved in the property market since 2003, when he realised that no one delivered a one-stop shop for investors in the buy-to-let market.
At the time he only had the properties he lived in. "I sat down and thought "what would make me buy an investment property?" he says.
He realised that there were several things that would encourage him to become a buy-to-let investor; a sensibly priced property; a period of guaranteed rental income; a demonstrable increase in value of the property; a fully furnished property; and as an added extra "it would be great if that company put its money where its mouth is."
And so Imagine was born: a buy-to-let company that buys, rents, furnishes, guarantees a 7 per cent yield for the first two years and buys some of the property for itself. "Some of our stock is not available for three years and that means five years' peace of mind for the investor," says Bovey. "It is as attractive a proposition to someone buying an apartment for £120,000 in Manchester as it is to someone spending £30m in one go."
The property is all sourced in Britain, though it also sells to people worldwide. Imagine's Dubai office does 60 percent of the company's business. "There is still a global recognition that London and Britain is the best place to buy property," explains Bovey. "It is reliable."
Bovey has tapped into a market in which people are serious about their investments. "Some 95 per cent of our customers never visit what they buy. They buy the deal and it is the deal that intrigues them. In five years they will sell it, so they can't get personal about the colour of the tiles," explains Bovey.
A BIGGER PLAYER
This year Imagine has booked revenues of £120m, which Bovey anticipates will triple this year, and again next year, taking him to the magic £1bn mark. The company has already muted a stock market flotation.
The Imagine proposition seems startlingly simple, and yet as Bovey points out it is fiddly to sort out all the parts, which puts off the big property developers.
It is now harder for the larger players in the market to ignore Bovey, after all he buys his stock from the main housebuilders. In the early days Bovey recognised he was better known for his personal life than his professional abilities. He was also new to the property sector.
I don't think I was taken seriously until I had done three or four transactions," he says. "After that they had no choice because we were spending money. It was an interesting transition."
Bovey realised early on that he had to appear as though he was already successful in the sector. He looked for a suitably impressive office space. I looked at the Farnborough site in July 2004. We had only been going for eight or nine months and we had six people. I was looking at 10,000 square feet that was just a shell."
Like many of Bovey's moves it might have appeared risky at the time, but he was determined it was the right thing to do, "I said we are going to need an office of this magnitude and quality. We moved there in December and spent £1m on fitting it out." He explains. "I know I needed the space so that people took me more seriously."
He got a deal with Bank of Scotland instantly, which ensured he had enough money to buy property he needed, but also retained 100 per cent of Imagine Homes.
"The bank had big enthusiasm for what we were doing because we had come up with something new in the sector that turns over billions of pounds."
QUICK TURNAROUND
In 2005 Veritas Investments was set up as a joint venture with the Bank of Scotland. Veritas Investments buys 20 per cent of all the stock that Imagine Homes buys.
Bovey also set up Veritas One so that he could pick up a slice of the opportunity himself. "This is my private vehicle and has £50m of stock." He explains.
The final move was the addition of Imagine Furnishings, which Anthea Turner has a hand in.
Furnishing an Imagine home costs about £9,000 and Bovey says it is the key to their proposition.
"It became clear that it was critical that we were in control of the furniture solution." He says.
"It always amazes me that people spend £400,000 for an apartment and then £2,000 on furniture."
Good furnishing is key to speedy rental and as Bovey points out, the quicker you rent a flat the quicker you start to get a return on your investment.
"We are very successful in the rental market. Some 70 per cent of people that come and see the flats rent them." he says. "if we don't rent it, we don't make money."
STICKING TO THE PLAN
Bovey might appear to be confident in a sector he previously knew nothing about, but he admits to two errors of judgement in buying decisions along the way. "You learn from your mistakes." he says.
Four months ago Bovey bought a property on the notoriously busy Hogarth roundabout. It comes complete with one of the largest advertising sites in the country- perfect to grab the attention of people stuck in traffic on the A4.
Opening in 2007 it will be Imagine's first sales suites in the capital.
Another milestone for the company comes at the first wave of Imagine's Canary Wharf properties comes to the market. The £100m investment is Imagine's biggest to date.
Though Bovey has a business plan he says he is not looking beyond the next two years.
"We have a five-year business plan which we will try to stick to." he says. "If we achieve £1bn we will represent less than 5 per cent of the buy-to-let sector. It is fractured. My ambition is to become brand leader in the sector."
It seems very likely he will succeed.