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K E V I N E D G E
I N V E S T O R I N T E R V I E W
O
vertheyearsI'vebeeninsidemanya
HMO property, both before and
afterarefurbishmenthastakenplace
andmoreoftenthannotthestandardof finish
and furnishing could at best be described as
being'satisfactory'butnotexactlyinspiring.
So when I recently returned to St Albans
in Hertfordshire to conclude on an investor
interview and final video shoot, my
expectations were understandably based
on my previous experiences.
"Wow, when can I move in?" was my initial
reaction when walking through the front
door of the HMO property and it was made
to Kevin Edge, a long standing magazine
subscriberwhoselatestdevelopmentproject
I had come along to view.
I'd previously been at this development
site some three months earlier in June of
this year at around the 'first fix' stage with
loose wiring hanging everywhere, and with
walls still being plastered and so to see the
product in its almost finished stage was a
real eye-opener.
Alongside Kevin was his partner Anna,
whoclearlyhasagreateyeforinteriordesign
as the photos in this article demonstrate.
"It's been a hard three months but now
we are almost finished, and to see people's
very positive reactions when they first
come through the doorway makes it all
worthwhile," says Kevin.
It's been a long journey for this property
investor-developer as he explains: "Moving
into property investment and development
has been a natural progression for me. I've
spent almost 30 years in the construction
industry and to take the numerous lessons
learned and then apply all of that
accumulated practical site knowledge to an
end-to-end development project was
almost inevitable.
"I started my construction career in my
teens, working as a bricklayer. Twenty years
ago I set up our company Civic Design +
Build. We have set ourselves apart in
the market - not just with the quality of
workmanship, not even with the holistic
approach with project management,
in-house architect, interiors specialist and
trades - but by building relationships
with planning departments. That's a big
differentiator. And it matters in
understanding the local residential mix,
whichisimportantinpropertydevelopment.
"I'd already studied project management
to ensure we were managing each
customer's home as well as possible - and
morethanoneatatime.I'dbeenconsidering
the move into property development for a
while and a few years ago I bought a couple
of properties, fairly randomly if I'm honest,
and turned them around.
"But I also knew that I needed to know
more about the financial aspects as well as
the physical and product side of the industry.
As a result, I have been on various education
courses including an accountancy course
and a project management programme at
the University of Hertfordshire.
"Over the past few years I've also invested
in more structured property investment
training events, including Simon Zutshi's
year-longPropertyMastermindProgramme,
Paul Higgs's excellent Land Sourcing course,
andIhaveevenhadsomementoringrecently
with property entrepreneur Dan Hill. It's all
been quite eye-opening and I now take a
much more strategic approach to property
development. The education process has
graduallygivenmemoreconfidencetoapply
the investing theory to my own knowledge
basedonyearsof practicalexperience."
Kevin explains that alongside his ongoing
learning process in business and property
project management he gradually gained
more confidence (and profits) with doing
house conversions (flips), and then
progressed onto doing some new build
projectswithJVpartners.Oneof thosewasa
site with an existing bungalow upon it, which
wassubsequentlydemolishedandthenasix-
bedroom house with six bathrooms was built
on the site. And like many a successful
landlord and property investor he also
appreciates the value in not straying too far
fromthelocalpatchthatheknowssowell.
"It's very rewarding and enjoyable to
create something out of the ground," says
Kevin, "to take something from beginning to
end and see your vision realised."
Hislatestprojectisasalreadymentioneda
HMO development but it's very different
fromtheusualformulaof carvingupaformer
traditional family home into shared
accommodationwithfourormorebedrooms
plus a kitchen and bathroom(s) in one
dwelling. This is without doubt a property
investor-developer who thinks laterally and
who is also not afraid to go the extra mile to
createanappealingproductforhisclients.
RichardBowsertalkswiththeHertfordshirebasedlandlordandpropertydeveloperKevinEdge
HMO Property
- 21st Century Style
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2. "This stand-alone two-storey block was
originally intended to be a gymnasium,"
says Kevin, "and initially was used as the
site offices and employee canteen for a
large house-builder who completed some
500 residential apartment units on the
adjacent land here in St. Albans. They had
obtained planning permission to turn the
self-contained block into 4 x 2 bedroom
flats over two floors but upon completion of
the adjacent residential apartment blocks
they moved off-site and decided to sell
up without doing the development
themselves. It was perfect for us to take on
and adapt to what I felt would create a more
profitable venture.
"We have turned it around into four
separate 'mini-mo's', with each completely
self-contained HMO apartment having three
good sized bedrooms, a large kitchen diner,
separate bathroom and at least one en-suite
in each apartment. When we acquired the
unit it was literally a concrete block with little
more than a floor and a basic shell which we
then reconfigured to our specifications for
shared accommodation purposes."
One of the key attractions for Kevin was
the site's location, just a few hundred metres
fromthemainlinerailwaystationinStAlbans,
which is a very popular commuter town less
than25minutesbytrainintocentralLondon.
"I heard about the opportunity through
my network of contacts and we're well
known for our construction work in the
locality - and increasingly for property
development - in St Albans and nearby. It
suited me for several reasons."
I ask Kevin why he decided to purchase
and develop the site into HMO's rather than
just finish them off as two-bed units to then
sell on to owner-occupiers.
"I know the local market well and there's a
shortageof flatsandparticularlyhigh-quality
houses for multiple occupation usage. And
yet St Albans is a prime commuter belt - just
20 minutes from St Pancras by train with
the next stops being into the City at
Farringdon/Blackfriars. So this building's
close proximity to the train station was
immediately interesting. If you're a young
professional, heading off into the City for a
long day climbing the corporate ladder, you
don't want it to be even longer by the time
you've reached your home town.
"Once I knew the location was perfect, I
needed to see what the building was like. It
turned out to be relatively new, well
built with concrete floors and staircase,
structural steelwork and good floor-to-
ceiling heights, and I knew it was right for
conversion. That's the advantage of
spending 30 years on building sites!"
So it seems all those years 'knee deep
in muck' can pay off if you learn from
the experiences.
I ask Kevin why he chose to take the build
torent(BTR)approach."Decidingonbuildto
rent was easy, really," he reples, "as I thought
I could get the property at a price below
marketvalue,whichgavememoreleewayin
creating a high-end finish. The shortage of
flats locally means that values tend to rise,
makingroomrentalevenmoreattractive."
Experienced readers will be well aware of
theneedtoalwayssourcestockwherebyreal
value can be added and what is clear from
this project is that Kevin has significantly
enhanced the value of the asset by
converting the lounge in each of the four
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I N V E S T O R I N T E R V I E W
K E V I N E D G E
Top10TipsforPropertyDevelopment
1. It is all about creating value. Get real with
Gross Developed Value (GDV) by researching
the market. Break down to £ per square foot
value. Get to know local agents and invite
their opinions. Be conservative with GDV!
2. Look for angles others might have missed,
like increasing square footage of net saleable
space, upping desirability or introducing
clever design. Be realistic and have a friend
with industry knowledge to check your ideas.
3. Reverse-engineer your projects (Residual
Valuation). Work from a realistic GDV to
ascertain purchase prices and refurb budgets.
4. Look at previous planning applications for
local precedents or failed applications on
the site. These can indicate the local
authority's mindset.
5. Old buildings have a habit of hiding nasty
surprises; allow 30-50% cost contingency,
depending on the building.
6. Don't trust benchmark figures on £ per
square foot - break down costs in detail; talk
to your builder and trades. Budget for a site
or project manager.
7. Time has a cost. Rose-tinted glasses are
expensive. Projects, even tightly controlled,
can overrun, so factor this in.
8. Do utilities, water and drains need applying
for or moving? Don't underestimate the cost
or time this takes. Utility companies are not
your friend.
9. Plan multiple exits. What happens if the
market changes? Can you rent out? Protect
your downside.
10.Prepare early. Plan, schedule and specify the
project in detail and organise your builder up
front. This saves time, money and stress.
Confirm assumptions to create as much
certaintyaspossible.

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I N V E S T O R I N T E R V I E W
K E V I N E D G E
apartments into a third bedroom with an
en-suite attached. The kitchen diner areas
within each of the four HMO apartments are
still of a sufficient size to be appealing to the
three sharers within each unit.
This resulted in a complete
transformation of the financial projections
for the site and a commercial valuation
being subsequently given based on the
monthly income via the 12 room sharers
who will each be paying an average of £750
per month per room. See the accompanying
financial breakdown of basic costs and
cash-flow.
"The appeal of BTR for me was that I
could build enough equity," adds Kevin, "by
adding real value into the building and then
to take the development investment back
out; I still get to leave a good level of equity
in the property, which is tax-efficient, and
with the bonus being that I've still got
capital released for the next venture."
I ask if he has a sales timetable for the
development at any time in the foreseeable
future. "Possibly, but the current plan is to
keep them all for at least five years and to
use the very positive cash-flow to reduce
the outstanding finance debt. We may then
decide to have a gradual sale process,
subject to advice from our tax advisors but
it may also depend on whether government
changes its views on the tax treatment of
individual landlords in the future."
It's very clear to me that this is not your
typical builder, and that Kevin has a real
business brain as well as a keen eye for
detail. Many successful property investors
will often have the financial and business
skills but without having the hard won years
of practical experience in the building
industry, which can make a big difference.
Kevin continues: "I have met many
property investors and even some
developers over the years who really do not
appreciatethevalueof havingagoodbuilder
and working with them to maximise their
returns. Many investors will be skilled with
spreadsheets etc. but just don't grasp the
extra added value elements that a skilled
builder can bring to the table. As an example
it's a fact that qualified gas engineers have to
do regular training updates and probably
havedoneasmanyhoursof classroombased
learning as a lawyer or accountant. These
guys can often work with you to help reduce
your costs, to add investment value or to
suggestalternativewaysthataninvestormay
not have considered. Spreadsheets and
drawings are all very well but practical
buildingrelatedexperiencereallycounts.
"With the architects and interior designers
on my projects, as we are a design and build
company I get to work closely with them
and to help engineer value into the projects.
Pre-planning is probably the most important
thing to consider as many people want to get
started too quickly. The fact is that most
value can be added into the project even
before you start, if you go about it correctly.
Paying more attention to the detail before
you get there and start the works will pay
dividends. By doing so you can then often
eliminate many construction hassles ahead
and so have a far smoother journey."
Having perhaps somewhat belatedly
realised the commercial value of his
accumulate years of learning on
construction projects I would have been
very surprised if Kevin has said he was
about to now head off to the beach or golf
course into retirement when I ask him what
he now plans to do.
"I'll be continuing to grow the property
developmentsideof thebusiness,"hereplies,
"exploiting those decades of construction
experience and building an even stronger
professional network. I hope that quality will
continue to be a differentiator; the end
product has to be something I'm proud
of, that I'd be pleased to live in myself.
I'm particularly interested in new-build
developments and the BTR sector, and
I'm equally comfortable with assessing
opportunitiesforhouses,flatsorHMOs.
"I do now have a few developments at
various stages along the pipeline, working in
partnership with a couple of other property
investorsinthearea.I'llalsobecontinuingmy
training. I don't think we should ever stop
learning-youcanneverknowenoughabouta
subject. I'd like to share what knowledge and
experience I do have, though. Over the years
I've worked with some very knowledgeable
people who've been good enough to share
their insights with me and offer me their
support, and in the same vein, I'm always
happy to hear from and offer advice to
investorsandpropertyprofessionals."
And in the spirit of sharing with other
investors Kevin kindly offers some further
words of wisdom and practical advice for
aspiring property developers with his top 10
tips on property development. PIN
The Video interview with Kevin will
soon be available to Property Investor NewsTM
subscriberson:www.property-investor-news.com
Financialbreakdown…
Purchase Price £525,000
Conversion costs £265,000
Legals and SDLT £20,000
Finance costs £55,000
Total Cost £865,000
Valuation at Aug 16 £1,720,000
Profit £855,000
Section 106 max.
(under negotiation) £150,000
Cashflow (after taking out all
costs through refinance)
Projected Income £9,000
Expenses £4,200
Profit £4,800
ROCE % Infinite