David Coughlin: how I escaped recession era Liverpool to build a 100-property portfolio

David Coughlin’s journey from the son of an unemployed Bootle docker to a 100-property portfolio landlord is one of the private rental market’s more extraordinary journeys.

Now pushing fifty years old, it was in his mid-20s that he began investing in property.

Coughlin was born into a family where few if any of them had a job and was the first to get a degree (from Leicester University) going on to gain two post-graduate degrees at Cambridge University.

His first purchase didn’t go that well – a property in Manchester that, although it delivered healthy rental profits to help fund his 20-something lifestyle, failed to rise in value during the four years he spent working at McVities in the city.

In 1998 he then bagged a job as a senior operations manager at Mars food in Slough which included a seven days on and five days off shift pattern and £90,000 salary; the vital ingredients to start buying property – time and money.

“I bought a property for £165,000 in Windsor and two years later it was worth £250,000 so I listed it on one of the then newly-arrived online property sales websites and two guys came around to value it,” he says.

“They offered me £210,000 for a speedy cash sale but when I questioned the low valuation, they said there were lots of people in the area prepared to take a hit for a quick sale.”

This got Coughline thinking and, after buying a guide to property investment he had bought off the internet for £99 that plugged the importance of ‘motivated sellers’, decided to jack in his job and start a property portfolio.

Quick sale

He took three franchises out at property buying website QuickSale  in Berkshire, Lincolnshire and Chester and also joined several offline and online forums including the infamous Singing Pig to further educate himself about property.

“I initially used estate agents to source deals but they soon got wise to what I was doing so I switched to a more sophisticated marketing strategy using local paper advertorials to generate leads,” he says.

He bought two properties in Loughborough including a student HMO and a property in Burton-on-Trent and then a familiar pattern emerged – wait a few months after buying an under-priced property, remortgage it to extract the original deposit, and repeat.

Heyday

“It was the heyday of property then during the early noughties because lenders were still flexible and keen to lend to landlords, and house prices were rising,” he says.

Within three years Coughlin had amassed over 100 properties using this method, making him one of the first and certainly the most successful using this method.

“The key is understanding who the motivated sellers are – e.g. people who need and want to sell at a discount including landlords fed up with running HMOs, people moving abroad and those who can’t sell their property on the open market but can’t wait any longer,” he says.

“But it was also about helping the deals get across the line – hand holding tenants and where necessary offering purchase and rent-back deals which you could still do back in those days, which helped him bag half his portfolio.

Deal packaging

After realising that having 100 properties was the limit for a portfolio landlord, in 2007 he set up National Residential to apply his skills to the buy-to-let market, using the same techniques he’d learned building his portfolio to offer other landlords a deal packaging service.

This business model is not without its critics – and other ‘quick sale’ companies have been slammed for offering desperate sellers very low offers.

Coughlin has two answers to this – one is that his family’s humble beginnings installed in him a moral compass that compels him to treat his clients fairly, and that during the credit crunch he switched to an auctions-based business model.
“We do a valuation and then set a reserve price for the auction so the vendor knows what they are going to get. If it sells at or above the reserve price they’re happy, if it doesn’t they don’t sell,” he says.

Are downturns an opportunity?

But what about the looming economic downturn caused by Covid? Does his business thrive during recessions?

“A lot of people think that tight markets mean more people will want to sell quickly but the flipside of that is when lenders and surveyors are being cautious on valuations, this means the buyers’ demand wanes, our market wanes,” he says.
“So we do best when the market is booming – it’s easier to sell properties.

“During Covid we’ve decided to go all-out to help landlords who are hit by section 24 taxes, by the pandemic, and by the evictions ban – as we have investors who want to get into the buy-to-let market, so we’re acting as a consultancy/sales machine in the middle. 

“We do a far better job at getting deals over the line than traditional estate agents would, as we hand-hold tenants whose landlords are selling up and we also have national reach unlike most local agents.

“We’re targeting investors who want to sell between now and next march when furlough ends and the stamp duty holiday ends, and when CGT rises.”

Repeat success

But could someone repeat his success now? He says it would be possible but that it would take longer.

“You’ve got to buy property at a low price to make this work – and then refinance after a few months to get your deposit back to buy another property.

“Fifteen years ago, that was easy because mortgage lenders gave you 50 or 100 mortgages but now, they limit the risk at three and then says ‘prove yourself and you can have some more’. It’s more difficult now and if I was starting out now it would be more like 30 properties or 40 properties maximum in three years.”

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