Importance of Local Knowledge when Investing in Professional HMOs
One might go to a property course…or hear the promises of a property sourcer or portfolio builder…however on the ground the reality sets in. At least several times a day we either get an email or phone call regarding …sourcing a professional HMO…lets say in Eccles or Salford. They believe they can purchase at prices that were a year ago….more so offer a sourcing fee.
In the real world…investors who think they can do this probably will learn a sharp lesson. We will JV and align our interests with knowledge able….deep pocketed realistic investors…Not source for 3k as we are always offered. If you do not have aligned interests profits will be hard to come by.
We tried to utilise the services of a young gent who is very charismatic who promises “Portfolio building” We tried him on one Professional HMO and was a complete nightmare and complete mismanagement. Thank GD we are located in Manchester in order to clean up his mess!
Ironically, after one of us explains that we do not source…we seem to hear the proverbial line..
Well I will just do it by myself!
The reality is rather comical
- Since we are local, we have our finger on the pulse of good properties and know which ones first….The go by myself will probably be buying a property we passed on for a myriad of reasons…structural issues…crime….location …transport….what ever reason we decided not to purchase
- The go by myself thinks he will find a qualified builder. The reality is every good builder in Manchester is VERY busy. In all probability if they find a builder who is available for work…there must be good reason…probably either he is not qualified or might have a bad reputation.
- What seems to happen over and over again…the go by myself buys a lacking property….engages the services of less than professional builder….over pays this builder and it takes much longer than they ever expected. A 2-3 month project turns into 6 months to 1 year with MASSIVE overages…or in some cases builder just walks off the job. This is why we have contracts every time with every builder.
Even us, we are testing the waters in Doncaster with 2 young gents. They have local knowledge….very hungry…good communication…Doncaster is an area of massive Amazon warehouses. Yes there are many professional HMOs….however many are not up to code with room sizes & other issues. Local knowledge is knowing which streets are good…having long term relationships with quality builders.
Another instance is we are starting to invest up in Newcastle with a local gent. He is a probation officer. He knows the area intricately…plus has relationships from councils to charities.
This is local knowledge. If you really think you can do it on your own in order to make more money….I have seem too many people get burned.