Nothing beats local knowledge
Often, trying to close a property deal becomes more like detective work; and at times we do have to use specialist consultants to do the digging around for us.
Regarding a block we acquired, we were interested in acquiring the adjacent row of properties. However, the seller had a very unrealistic price on the three one storey units; a price of £2M, which quite clearly would not be worth it.
It’s a strange situation. The units are not being fully utilised. You would be hard pressed to find someone in the premises on any given day.
There has been a feeble attempt at planning, which has not really gone anywhere; partly, because there is a requirement to keep a certain distance from our building.
Therefore, the current situation is that unless they sell to us or vice versa there is not anything really one can do productively with the site.
I of course pointed this out to them with no avail. They suggested doing a JV which involves nailing down many variables, and having the party agree to execute them; which is not always as straight forward as it would seem. The potential to do a U turn at any point is always there.
Meanwhile, I decided to see who else was in the parade, and see if there was any appetite to do a deal collectively.
Rather than purchasing the individual sites, the most suitable method would be to do an option agreement to purchase all the property. This is an option, and not an obligation. This means you can simply not exercise it, and can walk away from the deal.
Once this is in place you are in gear to go for planning on the whole site, which if gained you would go ahead and exercise the agreement.
If the whole site can be secured, there seems to be great potential to go for a high rise development, which instead of having to follow the street scene you would be setting the street scene. There has been precedent, for a 27 storey block, which has been given approval just a stone’s throw away from this site.
So, the potential is there. In order to execute this well, it’s best to securely maximise the site we have and enjoy the rental income; and then chip away at the others.
It’s essential to speak to the locals in this situation. One conversation might furnish you with all the local information you need.
I got a good insight into all of the individuals and their personal circumstances by getting into a conversation with a local who has been in the area for 35 years. He knows the psyche of all the owners, and this is key to understanding their appetite to sell.
From this conversation I was able to gain a valuable insight which has changed the playing field. Now, it is a waiting game.