We have agreed a deal in North London. This is a site we are looking to purchase imminently. Our architect and the planning consultant have both been through the deal and have confirmed this is a site which has been earmarked for massive development.
I actually didn’t go to see the property until after it had been agreed and we had a response from the planners. Looking is way down on the list, especially if the property is only of site value which this one is.
After seeing the property over the weekend it was clear why the planners confirmed this was a hot site to purchase. Large buildings had sprung up all around this site, so it is clear the skyline is being lifted. The council would actually be pleased to grant planning in this location. The number we have been given is eighty flats on this site alone.
It was timely that this site came up as a similar planning site I had been writing about over the last couple of weeks actually didn’t go ahead, it fell through. Apparently the landlord next door to the site woke up and did the deal at a higher price than us. We were given the option of doing the deal, and from a financial point of view £100k – £200k extra would not be a deal breaker but on this occasion the principle overrode the decision making; the seller had shaken hands with us and now was back tracking, so for that reason alone we did not go ahead.
This investor had moved fast and therefore was understandably annoyed at the situation. But time to time this happens, it’s the nature of the beast.
We had already given instructions to the lawyer to transfer his funds back from whence they came. Luckily our lawyer was a little slow in doing so, so when the new deal was confirmed I called to check and luckily he was still in funds.
We were told to exchange like lightening, as bids were coming out of the woodwork, there is interest from 30 bidders on this deal. So we made sure the gun was cocked from our side and ready to fire, more so due to the last experience we had.
There are even possibilities of the next door site wanting to do a joint venture with us. This is a little spooky as this was the same situation as the last deal and it’s not every day you get a request for a JV from your neighbour.
However with this deal even if we do not come to any common terms with the neighbour this site has more potential than the last one as far as a standalone deal goes. With the last site we could have built 24 flats, with this one we are looking at 80 flats plus, given this isn’t as strong an area so the values wouldn’t be as strong.
We are yet to exchange and will do so by the time the article goes to print – hopefully. Sometimes things don’t always go to the plans we create, it is always good to remember whatever happens is always for the best, there may be something better around the corner which is outside of your realm of possibility. Long term things always work out even if at the moment they may seem disastrous.
I feel this is a rare deal, one you cannot even design; if you keep sowing the seeds through rain and shine there will be a time when the harvest will be plentiful. This deal has this potential.
Similar to the last deal, there is a lot of money to be made if a JV can be created but on this one the requirement to do so is not necessary meaning we have enough development potential standing on our own legs. Once the exchange has been done we can then approach the other party and see if we can work together on something. Let’s see once we cross the line, if at all!
We are currently looking to fund a property we exchanged on a few weeks ago in Bryanston Square. The deal is a good one, we purchased at £1,544 per sq. ft. We thought the property was worth £2,200 per sq. ft. One agent- who knows her stuff - came to see the property and thought the price would be more at the £2,500 per sq. ft. mark. This is a massive mark-up given the W1 postcode. Ideally we wish to purchase this in cash and use it as a long term or even permanent investment.
Many of our clients do not like the idea of coming in collectively. They wish to have control. Many have come with bad experience in the past and so project this on to anything they look at. It’s actually illogical. It’s the equivalent of reasoning if you’ve had bad relationship you shouldn’t get married ever again.
JVs go wrong when the terms and procedures are not specified up front. When this is done with clarity then the deal can be focused on - on a purely commercial basis.
The basis on which we are pushing this deal is it is better to have half a pure diamond than a whole piece of a glass one. It will go up in value far quicker. The aim from the outset is to buy and hold, as I cannot see a property like this ever going down. The money will not be stuck, as the aim will be to extract it by way of refinance within a couple of years. So we aim to recycle the funds but not the property and build a long term pot starting from this deal as a base.
I see this property going up to a minimum of £1.7m from our purchase price of £1.3m within one year and that’s being conservative. If you’re interested in this deal or similar types of deals why not get in touch, its doors are open right now.
