Property Sourcing Nightmare

by | Jul 26, 2019 | buy to let, HMO |

Property Sourcing Nightmare

We have seen it so many times in the last 5 years in our property business in the UK. Today our electrician completed a job on one of our Social HMOs. He asked if we could pay him very quickly as he just finished 2 jobs in Sheffield and Doncaster and did not get paid 10k. What it seems, there is a sourcing company there who promises investors that they will find a property and refurbish it. Promises…Promises….

What happened in this situation, the sourcer sold a Far East investors ( Guess which country) two professional HMOs. Ok, the Chinese investor bought the 2 properties. It was a 40k refurb job to make the professional en suite HMO. This investor was charged 60k, plus sourcing fees and project management fees…which never occurred.

What happened the Sourcer, found a cowboy builder who outsourced many jobs including to our electrician. What he did was only work on one Professional HMO and provided pictures stating that it was both properties. Then low and behold did the provebial disappearing act…along with the money.

Our electrician is out 10k his cost for work…plus lost time and money that he could have had on other jobs. The investor is even more screwed. This is reality…this happens so often. That is why we will not source properties, rather sell ready made tenanted cash flowing Professional HMOs or Social HMOs. Mostly we keep, but we sell some in order to raise liquidity.

We had one gent recently said to us, why would I pay you x when I can source with a gent for cheaper & we know who has an issue telling the truth. This sourcer promised the moon and high yields. We simply told him, go with him and try.

The reason I am writing this, is that so often people from China, Hong Kong, Dubai think they can source and never visit the property. Good Luck. We are doing family social houses in the North East. We are there at least once a week. We have a good project manager, but we must manage him and check EVERYTHING.

Be realistic if you think you can project manage from half way across the world.