Strange headline for a blog post you may think, but it is a genuine question. A book idea that I believe would carry a lot of value to others, is about the concept of more predictable property investing. In other words, how can an investor remove as much guesswork as possible from a property deal, and replace that with more predictability of a positive outcome. What would that mean for your investment decisions, your deal selection, your profits, your sanity, your ability to secure JV partners?
Here’s a small snippet of how this approach applies to a real property scenario for us. Last year I shared a blog post called ‘START-UP LESSONS FROM A CITY CENTRE RENT-TO-RENT SA BUSINESS’, which highlighted key learns from our first foray into serviced accommodation. Chris and I have had 2 iterations in our SA business. The first took the naive approach of ‘build it and they will come’ (have you seen Field of Dreams?).
We set up an expensive R2R SA business in Edinburgh city centre thinking ‘we can’t go wrong because its our capital city, it’s the UK’s second largest Financial Services centre in the UK, we have year long toursim, blah blah blah’. We essentially set up 4 units in quick succession, threw up listings on the online travel agent sites (OTA’s) and hoped for the best.
Was that clever?
We quickly realised it wasn’t as easy as that. Whilst any newbie can make money in the summer, those properties limped along for 2 yrs and we closed them down in Q3 of 2018.
Iteration 2 was a completely different story, like night and day. This time we applied an approach I learned from software entrepreneurs – to first go out and find the pain point in the market to solve- in other words find the specific audience demand to serve. I made it my mission to find a problem that we could help solve with accommodation and get as close to pre-selling the solution as possible ie taking an advance order. If I write the book I can go into the specific detail detail but for the purposes of keeping this post short, I secured a demand in advance of having the property. In other words a contracting company that needed accommodation for about 5 months for 6 guys, plus the promise of more to come if I could deliver.
So here I was with a pre-order for a serviced accommodation property, if I could come up with the goods in a set time frame, then we would have the business.
See the difference in the business model? Version 1- throw a property up and hope for the best vs Version 2- A corporate client ready to pay us for a 5 month booking, all we have to do is deliver the property. Do you think we bent over backwards to deliver on that? You bet we did.
Delivering on this new type of business model, and further validating the demand, led to us expanding with confidence that year as we rolled out a further 9 more properties serving the same audience.
Looking back and connecting the dots I can see where this approach has served been and at play and where it hasn’t, and the outcomes are vastly different. For example, the first investment property I bought in 2007 because it LOOKED CHEAP. The poorest performer in my portfolio by far, and it’s because I wasn’t applying the investing approach then that we have developed over the years.
Now moving forwards, all of the deals Chris and I seek out, look at, and analyse are derived from this approach and have to satisfy enough of the predictable criteria for us to commit. And we’re not just talking serviced accommodation, we apply this investment approach to all nature of deals, especially where a large chunk of our time is spent now – diversifying into development and commercial deals. In fact, this approach is even more important when moving into a newer strategy where your experience hasn’t yet revealed the major patterns and learns.
So that’s the concept I learned from mentors in starting a software business back in 2014 and eventually started to weave into our approach to property investing from the end of 2016. Start with the end user need/problem to solve, validate the solution by getting commitment from the end user, then go ahead and deliver it.
Having invested with and without this formula, we feel it’s such a powerful approach that there’s huge merit in sharing it. To help others de-risk property deals and invest with confidence. That’s the conversation going on in my own head at least, hence the reason for asking you wonderful people – would you buy a book about this?
I’d be excited to write about not just our experiences but also want to report on other examples where savvy investors have taken a similar approach to their property investing. My thinking is that drawing out these lessons and articulating them into steps that others can implement could have a massively positive impact on others by accelerating their learning curve.
So in closing, would you buy a book creating more predictable property deals?
And if so, what would you want to get from reading it?
Thank you so much for taking the time to read and reply