Creating Lasting and Successful JV property Deals in Professional HMOs
We are property investors since 1994. We have met all types of builders and other property investors. We have been doing JV property deals since 1994. We are not builders….however we know to a very high degree time and cost of materials& labor. We have been working in Manchester since 2014. We started with several groups including builders. We have been doing more of our deals with a local set of brothers who own themselves 50 properties. We started slowly with one buy to let. It was a very small deal. However it was all about communication, managing the builders and tenants…From there we did 2 Social HMOs. Again…constant communication…updates….Yes there were issues….however they were addressed promptly. There was a learning curve but hard work and aligned interests got us over the issues. Now we have 12 Professional and Social HMOs that are tenanted & cash flowing plus up for sale. We are in progress of conveying on another 5 properties as well.
Contrary to this, so many new and want to be property investors think they can outsource finding properties….project managing etc. Yesterday, like virtually every day I had a call from a London city worker who in the process of 3 deals. One of them was a professional HMO in a VERY rough area of Manchester. I would not attempt a buy to let there let alone a Professional HMO. His other error was buying the property from the same sourcer whom he was using to do the refurb. Our Professional HMO with 4-5 ensuites take on average 8-10 weeks with a full rip out. This investor is still having the refurb go through since January with out en suites ( 3 months….no calls returned and extremely slow progress) . Worse is lack of communication!
Some of the keypoints of a good JV partnership is communication and mostly aligned interests. My colleagues in Manchester are not paid by the hour or paid for managing a project. They earn 50% of the profits. The common error I see over and over again are investors who basically are greedy and do not want to share the upside.
When we share the profits ….we get the best deals ….we get dedicated partners…we have communication….We make more and our partners make more by having aligned interests. I would tend to believe there are sourcers who are honorable and hard working…However daily hear so many nightmares…That is why people consider buying ready made Professional and Social HMOs.
Another of our JV partners are 2 young gents. At 7.15 we already chatted about the progress and even more interesting he has potentially sold this Professional HMO to his mortgage broker. However my wife likes to walk instead of running. We found a 23 bed Professional HMO plus they offered a 11 bed Professional HMO. My wife’s reply….lets finish the refurb on this professional HMO timely….get it tenanted…then we can look at another project. All of these steps are building confidence…or maybe even better said…Joint confidence. It is paramount to have mutual success.
Like to hear thoughts and questions…