Do Not Ask for Money –Offer Opportunities on Property
As in any typical day, I had back to back discussions with potential buyers on both our Social Housing HMOs and Professional HMOs. Many times there are a lot of time wasters. I was on the phone and Skype sharing my screen for more than 3 hours yesterday. The calls initiated with inquiries for HMO properties in which we are selling. However the call shifted to learning more about how to work together as Joint venture partners as they thought it could be more profitable in the long run. I spoke with a London gent as well as two investors from Hong Kong. I really thought we were discussing the sales of existing HMO properties. I knew we have proved ourselves with our HMO investments & the profits we have made. The light bulb turned on that I was offering them opportunities and not simply selling nor asking for money for projects. We did not need their money for any current HMO projects we are doing. We can easily do any of our current deals, however I know at some point we will run out of money. However we can easily take on additional projects.
They asked questions regarding security and how the Joint venture worked. I also asked questions & their motivations. I wanted to make sure there could be a synergy.
I learned that one of them had done private lending on property, owned 2 HMOs and was potentially interested in doing Joint venture deals. They saw the blog posts in which I detailed exact deals that we did over the year. During the call, I showed them conveyance statements both on buys and sells plus construction quotes. I shared pictures before and after on various deals. I explained that we are flexible in order to meet their needs and expectations. For example, they could purchase the property in their company name, escrow with their solicitor money for the refurbishment and even for added security have a surveyor confirm works were completed up to code and money released via the works schedule. They owned the project. No one could take it away from them. Furthermore, I explained to cover our interests we need a RX1 on the property ( The property could not be sold out underneath us).
More so, another option is that we could provide a finished tenanted cash flowing Professional HMO to lend against while it was up for sale. This also limited their risk.
Another idea came out was, they could buy the project, we furbish it, we have it tenanted and they could refinance it to get out most or all of their money and we jointly keep it for a period of time. I shared an example of a HMO property we did in Salford on Langton Street. This was a 4 bed HMO that was cash flowing 11,960 per year. We sold it approx 1 year ago…maybe slightly longer for 100,000. Today that same property is worth 130,000 at a minimum. We were in that property finished, done and dusted 70,000 ( yes we bought it right). We were happy making 30,000 on 70,000. However what I showed them with a little patience & the fact it was cash flowing much greater profits were possible.
The key of this is…first learn and make profitable deals happen. Learn on the small and make mistakes on the small. Have in an easy format, buy and sell completion statements & building works contracts. Show the profits you made on several deals.
You do not need to sell….You simply need to present opportunities.
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