Currently I’m working on a deal with a chap who’s run into some financial difficulty, but is making out he hasn’t. In fact, he’s going so far the other way, its endears suspicion.
Doing a deal is about ONE number, and the time period to execute the deal. Nothing more. The rest is noise, some of it can be useful, but most of it serves as mere distraction.
This chap tells me the number of offers he has had for the property, and the potential for the building, with two assumptions in mind: one, that I will believe anything which comes out of his mouth, and two, it has any influence on me.
Nonetheless, all of these dramatics do tell me one thing, he is desperate and has little or no other option. Therefore, when he sees the money, all the noise is likely to evaporate and he will grab it. So, in order to do this deal it’s wise to send the offer through the lawyer, with the lawyer stating that he has had sight of the funds and we are ready to execute.
The completion period can probably be agreed at the time of exchange, especially if we are prepared to release the monies on exchange. This does come with its own risks however.
The property is of dubious classification, meaning it is neither residential or commercial. It’s been classed as sui generis which is a Latin phrase, meaning in a class by itself; or unique. Another way is to say no one knows what the hell it is.
I’m assuming there has been some bodged up planning application on it, probably without any permission, which has led to this classification, as there has been work done on it. It will need to be investigated from the bottom upwards. Nothing here can be taken at face value. Given this, it’s important to have the deal locked up first, as you could spend your time going through the paperwork and during the midst of this the deal gets pulled from under your feet.
This is a great deal, and will probably require the full amount of the property in cash, or an expensive bridging loan for a short term, whilst the planning is sorted out.
It’s a very large lump, about a 1,000 sq. ft., the strike price will be £400,000. You’ll be paying circa £400 per sq. ft. for this property. The prices in this location go for circa £1,000 per sq. ft. This property is situated in a prime location, and I believe it will rent very easily. I don’t say resell, because the entrance is a little weird, it’s through an alley way; and therefore would dampen the saleability. But the location is super strong, it’s right opposite a station which means it should rent in days if not hours.
The property is a duplex, and given the plan is not to resell it, there is only one thing to do with this, and that is to turn it into a Cash Cow. This can be achieved by doing an HMO on the property, as it will be far easier to rent out 5 or 6 small rooms than a larger lump. I suspect that as there is not enough stock at the lower end of the market, the yield will go through the roof, and that’s in a top location.
