Closing the Deal  

I went to see a property last week, in a prime part of East London.  It consists of a shop and uppers.  The beauty of this property is it is generating income from both the commercial and the residential.  The commercial tenant has only a couple of years left on the lease, and it can be assumed they will not be renewing.  There are four flats above, which are all rented; albeit under rented.   
  
As there is income coming in from day one, a generous yield even in the current environment, this allows some breathing space; and allows for any speed bumps which will inevitably come along as the project progresses.   
  
There is a lot of room in the rear for planning; basically, to pull the whole building back, and a little upwards.   
  
The risk here is rising build costs and interest rate costs.  Make no mistake, the avalanche has just started in the economy; it will get worse.  A banker whom I met recently was of the naive and optimistic opinion that the new PM will simply rectify the wrongs done by the previous PM, and we will be fine by the summer.  Not likely.  Time will tell, however.   
  
The appetite for the right type of property is still exceedingly strong, perhaps this is because of the environment, and not despite it.  Property is a good inflation proof investment, and much better than keeping funds in the bank.  Perhaps investors know this and therefore the appetite for property investment has not been dampened but become more refined; they use the environment to become more choosier as to where to invest.   
  
This property consequently attracted a large number of bids; and we were at the fag end.   
  
An offer is one thing, if you’re chosen you’ll get the contract; closing the deal is something else.   
  
The sellers presumably will choose the highest bid, but if they do not perform then they will get frustrated, the under bidders will have dissipated, and hopefully we may still be left in the running; having started out as the underdog, and in pole position.  This has happened before, when sellers have been messed about, the quality they look for most in engaging someone else is the ability to execute the deal.   
  
This is the angle we will be aiming for in the deal.  As time goes on the economic avalanche will get bigger, interest rates will continue to rise, and the enthusiasm to do this deal will diminish.  We will be prowling around this deal waiting for this to happen.   
  
Of course, the other scenario is the top bidders could just complete the deal in a timely manner.  That’s the game we choose to play; then we move to the next one.   
  
Although saying this, there has also been a situation where we had bidders rush to exchange on four mews houses in Paddington, in a rush to beat us to the line, they did, but then they failed to complete the transaction and lost their deposit.   
  
The property went to auction, where it landed in our lap and it was completed.   
  
So, the game isn’t over until it’s really over; and it’s worth keeping a beady eye out until actual completion.