Several weeks ago I wrote about the importance of deal flow for property investors, which proved to be a popular post. It feels right to revisit the message of that post because this week played out a hand that saw us experiencing some of the typical highs and lows of property investing. But you know what, it’s all manageable, in most part thanks to the mindset we have taken the time to work on and develop over the years. So much of this property game is mindset, and that can often be forgotten.
I’m going to touch on three of our deals below that have been part of our recent Millionaire Maker journey, to draw out a few of the emotional/mindset aspects they might benefit others working on their own property deals.
DEAL #1- A LONG AWAITED PURCHASE COMPLETION
On Tuesday we experienced the feeling of joy and success with the completion of a purchase for a simple little 2 bedroom BTL. The property is simple, but the purchase process was anything but. We had an offer accepted back in early May and here we are completing almost 3 and a half months later. You’re no doubt wondering why did such a simple deal take so long to go through the conveyancing? Well it came to light during the legal searches that there was a restriction on the title – in other words an RX1- meaning that the property couldn’t be sold without the consent from a particular party.
What is required legally is a signed RX4 form that withdraws the restriction, and this is what took so long. After 3 and a half months we finally own the property and can progress our plans to refurbish, refinance and let.
DEAL #2- PLANNING A REFURB OF AN HMO FOR USE AS SERVICED ACCOMMODATION
On Wednesday, Chris and I walked round an HMO I’ve owned with a JV partner for many years to finalise a top to bottom refurb so we can drop it into our SA management business. Although we successfully got an HMO license on the property a few years ago (we got that to widen our tenant pool and cash potential) we have never actually had to formally use it since the property has been long term tenanted by a family through the Local Council. When I say a family, I mean 3 generations and maybe 8-10 people at any one time living in a 4 bedroom semi.
We have been trying to regain possession for almost a year but had had to be patient with the council and the tenants to let them go through the process of finding an alternative house. Needless to say, years of heavy wear and tear, smoking, multiple kids, virtually no garden maintenance has left the place looking extremely tired. I’ve attached a walk round video explaining what we are doing to the place over the coming weeks.
So with the feeling of relief, the excitement of a fresh start and a new SA property, comes the sinking reality of a refurb budget much higher than you would like.
DEAL #3- OFFER REJECTED ON A COMMERCIAL BUILDING WE REALLY WANTED
Chris and I viewed a building at the end of June that showed real promise, if purchased at the right price of course. To arrive at what that right price would be took many conversations and hours of analysis because we were looking at optimising 2 commercial units and anywhere from 4-6 flats above for either SA or single lets. We even got things to a point where we had meaningful conversations live with a prospective commercial tenant.
Back from a holiday this week I picked up with the agent to learn there had been a flurry of interest in the last week and that we’d need to submit our best offer asap if we want to be considered. Within 24 hours, Chris and I, along with our JV partner, formulated what we felt was a fair offer. When you submit an offer like that for a pretty big building, even if you are competing against other investors, you can’t help but harbour a quiet excitement in the back of your mind all day long…thinking ‘what would it be like if we do secure this, how cool would that be?’
I got the call at 4.30pm on Friday with the news that our offer was rejected. I let myself feel properly p@ssed off and disappointed for a few minutes before reminding myself that we have some other strong potential deals in the pipeline. This one that we wanted and offered on may come back to us, but for now we need to turn our focus next week to progressing our analysis and thinking on two other great mixed use deals, one of which even has the potential to bring in a pizza chain.
Without the knowledge of more shortlisted potential deals moving into our front line focus (ie our deal flow) we would be dwelling on our rejected offer for way longer. Experiences like this really emphasise the importance of deal flow. We know that being in a mental state dwelling on rejection, frustration and disappointment, we are not at our best and most resourceful to help move our business forward.
CONCLUSION
If anyone reading this has heard me speak you may well have heard me reference the Kelley & Connor emotional cycle of change model (see the diagram attached). Knowing the reality of this emotional rollercoaster that property entrepreneurs have to cycle through weekly, monthly, yearly – this is why mindset is such a big part of the property game. You can’t one up the universe and avoid these highs and lows, but you can develop a mindset to work through the dips as quickly as possible.
I encourage you to keep watching the progress of the remaining Millionaire Makers on the Touchstone Education Youtube Channel (new episodes are broadcast every Sunday). A massive thank you to anyone who has voted to keep Chris and I in the competition, we hope to be in it for as long as possible so we can continue to share our learnings.