Following my article some weeks ago regarding the pub we purchased on Milson Road, where we were exploring different options, it has now been agreed to proceed with a sale for £2m. However a deal is not done until it is done.
Therefore I have agreed the sale on the basis it is exchanged by Friday, within a four day period, whilst keeping another offer for the same level on the back burner. It’s amazing how sharp and efficient lawyers and buyers get when you threaten them with a deadline.
Here it is a genuine threat. There are two offers at the same level, I have gone with the one I know will move the fastest. One reason is they are using a law firm whom we have used before and will perform fast.
The property was purchased in late September 2013; we aim to conclude by the end of May 2014. We will have made £750k gross within an eight month period on an investment of £1.25m. A handsome return; the planning for three flats of course added value but the pub was bought cheap to begin with.
When we were purchasing it there was another offer on the pub at the same amount, we got to know about it and kept a close eye on the matter. When they failed to perform, we stepped in. It transpired the original purchaser was trying to resell the property without even exchanging on it themselves! A game some in the market like to play. It yields handsome rewards if you can manage to pull this off, you make money with no money. But it does little for your reputation in the market and is a rare occurrence when you can pull this off, more often than not it falls flat on its face leaving a chain of annoyed people.
This investor that we are working with has a taste of the hit and run strategy we execute, and this is his third transaction with us. Once we give them a taste of this level of return they tend to get hooked. The profit is like a drug, and we are one of the few pushers in a market who are offering it in such a high dosage administered in a short time period. Hence we have addicts who have not many places to go and return back to us for fix after fix.
I spoke to the partner of the firm we used to set up our fund back in December 2013 and asked him if he knew of a property fund who is offering the level of return we were expecting to return, he replied he did not and wished he could invest as well. Due to a conflict of interest he could not. He will however be investing in our next fund which should be launching shortly, as it will be listed on one of the exchanges.
The proceeds of the sale of the pub will be rolled over into another deal we have just agreed this week, if of course it occurs.
It’s not always easy to synchronise deals. Property deals are lumpy in nature and each one is unique.
Currently the activity in auctions is going through the roof, all the statistics are rising from the average lot sizes to the sale rates. Auction House London which started only a few years ago has just had its highest auction results to date; it raised £16m. £1m of this total was due to our lot in Hampstead, a troublesome property, purchased for £850k a few weeks prior.
There was a time when frankly I felt embarrassed for the auctioneer as there was such little attendance in the auction room, this was during the credit crunch, it wisely amalgamated with two other auctioneers to ensure survival through these dark times.
There are some good lots coming up in the auctions over the next couple of months, but I’m loathed to go and put energy into them as properties currently are generally going for higher amounts in the auction than through the agents. Traders are even purchasing properties on the market and then reselling them at auction for higher prices. There are too many hungry buyers in the market place who have been indoctrinated by TV programs such as Homes Under The Hammer which comes on twice a day. Lenders are having trouble lending as the valuers cannot find any comparables for the prices which are paid; they are unprecedented.
There is a silver lining to this, properties which have issues attached to them, say the tenancy terms are unknown, or the council has placed an order on them, are going cheaper than they should. This herd which is turning up at auctions, is on the whole a novice herd, they want everything on the plate and many are purchasing not because they are buying a deal in the current market, but they hope it will be a deal in the future; they purchase with the anticipation of a future price rise. A dangerous situation; this means a herd mentality is developing, people are buying on the basis everyone else is buying, its link to reality is broken.
One saving grace which is underpinning the property values which did not exist prior is the amount of foreign money which is coming in to the UK. Political and economic situations around the world have contributed to this inflow of funds. The funds are not coming to make money, they are coming here because London property is a good safe deposit box. Your money is kept safe out of harm’s way and the rise is a bonus.
As sure as autumn follows summer the property market will take a turn, however the amount of foreign funds in the market will serve to cushion if not insulate completely the drop in price.
Finchley Road, London, NW11
Purchase Price: £440k
- A large three bedroom first floor flat in a highly sought after location
- Low service charges
- Long lease of more than 100 years
- Communal gardens
- Close to shops, restaurants, bars and cafés of Finchley Road and West Hampstead
- Excellent buy to let investment
Call us now to secure this deal!
Sow & Reap
A Property Investment Company
!Tips of the Week
The speed with which you make decisions and commit to them will ensure you get deals time and time again.
Always remember to see an investment from the markets’ eyes and not your own.