Hotel Conversion: £715k Buy, £850k Refurb, £2.4M End Value | Taylor McDonald | PCN Podcast #37

Taylor McDonald bought a 9 bedroom hotel for £715,000, spent £800k to £850k turning it into 17 units, and is holding a £2.4M commercial valuation. This is the full hotel conversion breakdown, plus the property sourcing business and serviced accommodation portfolio that fund it.

Episode 37 of the PCN Property Podcast. David Smart sits down with Taylor McDonald, who invests around Montrose, Arbroath, Dundee and Aberdeen and runs three things at once: a property sourcing business, a serviced accommodation portfolio and SA management company sitting just shy of 20 units, and a hotel conversion he and his business partners have taken from 9 bedrooms to 17 units without adding a single square metre of footprint.

HOTEL CONVERSION: THE REAL NUMBERS They paid £715,000 against a £750,000 asking price, so barely any discount, because the discount was never the point. The refurb is running £800,000 to £850,000 including furnishings, putting them roughly £1.5M to £1.6M in. The commercial survey has been renewed three times and come back at £2.4M every time (four valuations from two companies: 2.4, 2.4, 2.4 and a 2.25).

Taylor is equally open about what went wrong. Fees and interest were budgeted around £200,000 and have edged up to £300,000 or £400,000. Reworking the scheme after problems with the professional team added at least six months, and that is six more months of bridging, rates, gas and electric on a building earning nothing. Two and a half years start to finish.

He also opens the funding stack: £1.15M raised between shareholders and private investment, a £550,000 first round to buy it and a further £600,000 injected by a new shareholder, investors paid 10 to 12 percent depending on amount and term, and a conservative projection of around £50,000 a month gross and £200,000 to £250,000 a year net once it trades.

There is a genuinely useful stretch on fire strategy and use class too. Why they stayed in use class 7 rather than going Sui Generis, how they designed out the live in staff member a hotel normally needs, the £1,500 a door digital locks that deadlock and release automatically when the alarm goes, and why three fire consultants gave three completely different answers about what compliance actually costs.

SERVICED ACCOMMODATION VS BUY TO LET Real numbers on both. His five or six buy to lets gross around £3,000 a month and net about £2,000. One single SA unit was charging £6,500 a month and netting £4,000 to £4,500. Four SA units together do roughly £12,000 gross a month. One client's unit that Taylor sourced, refurbished and now manages outperforms that client's five buy to lets on its own.

He is honest about the trade off. An extra £20,000 to fit a property out for SA, and where 90 percent of flats will work as a buy to let only 20 to 25 percent suit serviced accommodation. He keeps a minimum of three months of bills per property in the account to ride out a quiet winter.

PROPERTY SOURCING Dropping upfront client fees about a year ago took him from roughly one deal a month to a deal a week. He spends about £2,000 a month on ads, runs the whole thing with no employees on about £3,500 a month of outsourced overheads, and treats sourcing as a deliberate loss leader (the Costco hot dog strategy). Plus why Montrose and the wind farm money changed the area, and why doing 50 deals a year as a sourcer teaches you more than buying six properties yourself.

Also covered: burnout and the 10 hour work window, why he switches his phone off at five, losing his gran ten days before recording, and getting down to a 40 hour week before his first baby arrives in December.

CHAPTERS 0:00 Intro: 5am starts and a hotel site visit by 8 2:18 Whiteboards, WhatsApp and a 10 hour work window 6:16 The full setup: sourcing, SA, management, hotel 10:25 £2k net from the buy to lets vs £4.5k from one SA unit 12:48 Montrose and Peterhead: wind farms and the port 16:18 A deal a week, and sourcing as the loss leader 22:04 £2k a month on ads and Meta