SONGWRITER ERROL ‘DJ PALEFACE’ REID GOES FROM GLOBAL HITS IN MUSIC TO PROPERTY INVESTMENTS WITH GURU SAMUEL LEEDS
Samuel Leeds’s The Winners On A Wednesday YouTube Series Welcomes Errol, The One Who Wrote The Chorus To Drake’s Huge International Hit ‘One Dance’
“The Performing Rights Society is my lifeline. If you write a song, you don’t even have to perform it. You can write the song down and the lyrics and give it to someone. Every time it gets played on radio or TV or broadcast in a shop, that shop [or station] has to pay a PRS license fee.”, says Errol ‘DJ Paleface’ Reid.
“Say One Dance gets played on the radio today, you’ve got to wait at least six months for the PRS to hit and come back around,” says Errol who owns the Northern Line Records label. The Society also pays out royalties on other uses of music on streaming services such as Spotify, for example, which again takes several months to be processed. This directly affected his mortgage ability – just as the couple was trying to buy their first house.
‘I was refused a mortgage twice despite the huge success of One Dance’
Initially, they wanted to put down a deposit of £100,000 and obtain a mortgage of £200,000. As they were self-employed, the bank demanded to see all their accounts including evidence of their earnings for the past four years.
“They also wanted a letter from the accountant saying we were going to be capable of earning a certain amount of money. We jumped through all these hoops but then we were told we’d been declined a mortgage,” Errol recalls.
By this time three months had passed, and they had raised another £100,000. So, this time they applied to borrow £100,000 but were again turned down. As a result, they decided to buy the house with cash. They also paid the Stamp Duty and bought their first buy-to-let outright after saving a further £100,000.
DJ and songwriter Errol Reid had built up a portfolio of buy-to-lets from the proceeds of One Dance which is one of the best-performing singles of all time. It broke a world record in 2016 for more than one billion streams on Spotify and also topped the charts in 15 countries including the UK, USA, and Canada. Despite the phenomenal success, Errol and his singer-wife Kyla, who features as a guest vocalist on the song, were refused twice. The reason, he explains, was simple. Due to the way the music industry works, songwriters have to wait for their royalties to start rolling in before they become wealthy.
Errol has made a lot of money as a producer of house and garage music – his catalogue of songs was recently valued at £1.2m. But initially, he found it hard to get a loan. The PRS collects the fees and then distributes that income in the form of royalties to the members whose music has been used. But it can take several months for the payments to be made. Since then they have bought three more buy-to-lets and are looking forward to expanding their portfolio as the money continues to flow in from One Dance and other music.
Samuel’s YouTube Channel Inspires Errol’s wife Kyla To Invest In Property
“It still doesn’t feel real”
One Dance became the best-performing single worldwide of 2016 and remained number one in the UK charts for 15 consecutive weeks.
This started off when Errol was training to be a train driver to give himself some security when the opportunity came along to collaborate on what was to become a life-changing event for both him and his wife. They always make decisions together, but Kyla doesn’t involve herself in business. So, when Errol decided he wanted to start investing in property, he knew he had to win her over first.
Errol says, ‘There’s no point in me just doing this and she not understanding what’s going on. I knew she wasn’t going to read the property books, so I told her to look at Samuel’s YouTube video.’ In the end, she said, “He’s amazing, Errol. I get it.”
Errol says, ‘Samuel’s free content on YouTube provides a hugely valuable source of information without having to trawl through ‘a massive book’ to find it. For example, on HMO licensing, you’re going to find contradictory information simply because the rules vary from one area to another, depending on the council. Samuel comes on and tells you exactly what to do. It’s just concise. Those videos helped me to get my missus on board to start investing in property.’
The strategy is to buy three to four-bedroom properties for between £160,000 and £180,000 and rent them out as affordable housing to workers. All the buy-to-lets they have bought so far have been in the area where Kyla grew up which has given Errol a keen appreciation of house prices and how much to pay.
He is also a tough negotiator. He works on the principle that sellers put their homes on the market at inflated prices to achieve their target of what they are actually willing to accept. If you want to be greedy and hold out for someone else to come along then OK, but I’m not waiting around because at the moment I’ve got that money set aside. It’s potentially going to take a minimum of two months on average to complete the house sale. It can even be up to five months, especially at the moment.
“Cash is king in the property. If you’re a cash buyer, you negotiate because that’s the way the whole market is set up.”
These days they can show that they have enjoyed a high income for the past three years which makes raising finance for property investing much easier. Errol says, ‘I’m about to do a royalty financing deal at the moment so that I can free up some funds to invest in more buy to lets. It also has the advantage that any interest you pay is tax-deductible.”
“I bought a couple of gold bullion coins because there is no UK Capital Gains Tax (due to it being legal tender). It’s a good way of saving money but not a good way of making money. Property is the only thing where in my opinion if I put £50,000 down now then in five years’ time that £50,000 is still there but it’s made me £7,000 a year [in rent]. And it’s a passive income, barring the roof coming down or leaking. There’s not really much you have to do if you get a decent estate agent to manage it.”
To read the full article by Gary Slogan Click Here
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