Why We Constantly Seek Investors

All of us whom are in the property businesses already know that it requires a lot of capital. And unless you were fortunate enough to have started with a lot of wealth, you know that having access to the capital of others is essential if you are trying to scale. You need to have a base of investors, and continuously grow it. Why investors versus the banks? Time ….leverage and risk. Due to Brexit, it seems the banks are acting in slow motion. At least for us. We have 2 Social HMOs that generate almost 24,000 a year….we wanted to be cautious and get a 50% LTV…but SLOW MOTION.

If you remember 2009 banks tightened up yet the deals opened up. There were so many great deals that would have made investors and property investors very wealthy. Buying cheap and sitting tight…Pretty simple in thought…but most could not do this. They could not raise the funds or raise their risk threshold.

I was recently asked what was the most important issue in order to grow our business…Simple answer told him…

We most needed in order to grow my business. He was very surprised by my answer: “More investors.”However we qualified the right investors. Investors who can make a decision quickly once presented all the facts. Investors who are liquid. Investors who are like minded. Investors who are realistic ( Not like a gent who told us he wanted to make 20% every 6 months).

When we had our bridging company we went through a group of wantabee investors…However ended up with a core 5. A pool of investors is just like a well for water. If you keep using it, the water will dry up. You need to dig more wells—and deeper ones, as you grow. We had our core investors however picked up an investor here and there.

We are sure that youheard the phrase, “Find the deal and the money will follow.” Surely everyone saying that can’t be wrong, right?

I’ve got bad news for you—they are. And it won’t. For example we have 3 properties that can be converted into Social HMOs that will cost approx 83k…the rents will be 12,480 NET! With no voids…no management…and maintenance covered up to 5,000 per year. This is a 15% Net return…

We emailed out these deals to various investors who said they are very interested last night….Here it is 10.04 am UK time…Not one email back yet. It is not easy as there are so many tyre kickers out there.

We are always out there doing our own deals…using bank finance as well as looking to expand our inner circle. We thought to join the Chamber of Commerce. Attend Pin meetings and meetups. Go to property conferences. Get to know people here on the forums. Out of all of the outreach I’ve done over the years, none has born more fruit than just talking to others everywhere we go & simply saying what we are doing.

We are not selling. We are offering solid opportunities. This is the way you need to think about working with investors. We tell people that we are in the property investment business. We tell them about deals we have  done and deals we plan to do. If you haven’t done any deals, find a partner who brings something to the table that you don’t, and do some deals together to build your track record.

The idea is to spread the word. Maybe they tell a friend who turns out to be interested and they put you together.

The main thing in property is moving forward. Constantly moving forward.