25th May 2006
Grant Bovey Interview – Mortgage Advisor & Home Buyer
Imagine Homes founder, Grant Bovey, explains to Mortgage Advisor how he plans to reinvent the buy-to-let industry.
Words: James Seddon
Since the last property market boom, which gave many homeowners large sums of equity and turned them on to the financial benefits of investing in property, buy-to-let has become a regular dinner party conversation topic rather than the preserve of rich landowners.
Now, rather than a home being seen as a place to live, property is a lucrative investment to rival stocks and shares. According to figures from the Council of Mortgage Lenders (CML), buy-to-let mortgage advances have increased dramatically from 48,400 in 2000 to 223,800 in 2005 - an increase in value from £3.9bn to £24.5bn in only five years.
However, making decent money from buy-to-let property isn't easy, and requires hours of research and hard work. So, in an attempt to simplify the process, Grant Bovey founded Imagine Homes.
Best known for his marriage to ex-Blue Peter presenter and his celebrity boxing match with comedian Ricky Gervais, Grant Bovey isn't a name that conjures up images of landlords, tenants and high-yielding investments. However, as the chief executive and founder of Imagine Homes, Grant is fast becoming the rising star of the buy-to-let industry.
Imagining
Originally from Nottingham, Grant has founded and run a number of companies, including Watershed Pictures - a TV production company that held the world rights to Football Association images. However, despite being a multi-millionaire businessman with an interest in property, Grant never felt confidant enough to take the step into investing in bricks an mortar.
"I'd often though about buying residential investment property for myself but never did because, although I consider myself to be a risk taker, when I weighed up the amount of effort it would take to find a property with very little knowledge of the market and then take the risk of not being able to find a tenant. I didn't want to do it," he explains.
Rather than dismiss investing in property, Grant decided to write down what would make him feel comfortable enough to spend a large sum of money in a market he didn't understand. After noting his ideas, which basically involved shouldering any work and stress faced by buy-to-let investors, Grant decided to use them as a business model.
Imagine Homes was founded in June 2003, and started by purchasing a block of apartments in Kew Riverside, Surrey for £30m. The homes sold out in 12 weeks, and since then he's never looked back.
Plan
The first step when buying a property you plan to let is to research the local area to learn about any new developments that may have an effect on the rental market or capital growth of the property. The process can be one of the most time-consuming elements in property investment, especially if you lack the knowledge required to make an informed decision. However, this is all part of Imagine Homes' service.
"We do all the research for you and search for areas where there is good growth potential," says Grant. "We're currently looking at Plymouth as we believe it's undervalued because if you look at the pound per square foot figures there compared to surrounding areas they're very low, and for no good reason. They're building a new shopping centre in Plymouth and there's lots of regeneration, which tends to drive property values."
However, where Imagine Homes' service differs from other buy-to-let companies is the extent to which it aims to make property investment as stress free as possible. Unlike most buy-to-let specialists that introduce you to a property and finish working for you on the day of completion, Imagine Homes handles everything for its customers for the first two years.
Rather than leaving you to find your own tenant, Imagine Homes will do that for you. Of there are any problems with the tenant in the first two years, it's Imagine Homes that deals with it, not you. In fact, the tenants that it chooses have proven particulary popular with Imagine homes' customers.
"I'd say that 90% of our customers decide to keep the tenant on after the end of two years," Grant says, "It's then a simple transition where they get the rent paid directly to them every month instead of by us once a year. It's a very easy way for people to get into buy-to-let."
Imagine Homes offers a guaranteed 7.5% rental yield per year for two years, paid directly to you in two annual lump sums - one on completion, and one on the first anniversary of completion. So, even if Imagine Homes fails to find a tenant or there is void period, you won't suffer financially.
Once you've decided to purchase a property owned by Imagine Homes you need to pay £2000 reservation fee and will be given a seven-day cooling off period in which you can change your mind and receive a full refund. If you decide to go ahead there is a 28-day period in which you would go to exchange on the property and pay a further £8000. Depending on the property and how faraway it is from completion, a further deposit may be required. The balance is paid on completion.
Another service available to imagine Homes' customers is the AT Homes furniture packs, which save landlords the time and stress of furnishing a flat. Each pack is designed by Grant's wife Anthea Turner, and costs £7000 for a one-bedroom apartment and £9000 for a two-bedroom apartment.
Although the packs are expensive, they have been proved a big hit with renters. According Grant, when Imagine Homes tried to let it's apartments unfurnished it had a 1 in 10 uptake. When the apartments were furnished with the AT Homes furniture, nine out of ten viewers signed on the day.
"I've never understood the logic of spending a fortune on a property to fill it with poor quality furnishings." Says Grant. "We only provide high quality solid furniture, not flat pack, that would cost over twice as much bought at retail prices."
Future
One motivation behind Grant's plans for Imagine Homes is his strong belief that the buy-to-let industry still has a way to go to improve its service to potential customers. In an attempt to improve this service to customers. Imagine Homes plans to revolutionise the company's service by opening a rental showroom where people can come and learn about property investment.
The 12,000 sq foot buy-to-let superstore is set to open in September at an undisclosed location in West London, and will include a 40 seater auditorium where potential investors can watch films about a particular development or area. There will also be weekly seminars about the residential investment centre and a crèche.
The showroom will be the first of its kind and, if successful, could act as a catalyst for a change in the buy-to-let industry. "a lot of our business is done on the telephone but we want people to be able to come to us," explains Grant. "We will use high-end technology to enable our customers to see what they want to buy from numerous angles and learn about the city it's situated in. it's a totally new way of operating to give investors what they want."
Buy-to-let can be an excellent way to increase your bank balance but, like other types of investment, it isn't risk free. Whether you're planning to get it alone or use a buy-to-let specialist, it's essential that you properly research the market you're planning to invest in before committing any money. As long as you understand exactly what you're buying and how much it will cost you and thoroughly read any contract you sign, you too could make a success of buy to let investment.
Grant's tips
- Look for an area that is undervalued for no good reason
- Find out about infrastructure improvements and developments that will make the area more attractive to buyers and renters
- Ask the development's sales person exactly why they think the property's value will increase. If they don't answer, don't buy it
- Furnish the property with high quality furnishings to attract a high calibre of tenant
- Thoroughly credit check any tenant to reduce the likelihood of missed payments.